Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 01, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Entity File Number | 001-39812 | |
Entity Registrant Name | Midwest Holding Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0362426 | |
Entity Address, Address Line One | 2900 S. 70th, SuiteĀ 400 | |
Entity Address, City or Town | Lincoln | |
Entity Address, State or Province | NE | |
Entity Address, Postal Zip Code | 68506 | |
City Area Code | 402 | |
Local Phone Number | 489-8266 | |
Title of 12(b) Security | Voting Common Stock, $0.001 par value | |
Trading Symbol | MDWT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 3,737,564 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0000355379 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Fixed maturities, available for sale, at fair value (amortized cost: $580,914,162 and $369,156,068, respectively) (See Note 4) | $ 588,861,261 | $ 377,163,358 |
Mortgage loans on real estate, held for investment | 130,372,068 | 94,989,970 |
Derivative instruments (See Note 5) | 16,422,394 | 11,361,034 |
Equity securities, at fair value (cost: $46,887,832 in 2021 and zero in 2020) | 46,924,170 | |
Other invested assets | 40,813,176 | 21,897,130 |
Investment escrow | 0 | 3,174,047 |
Federal Home Loan Bank (FHLB) stock | 500,000 | |
Preferred stock | 4,728,375 | 3,897,980 |
Notes receivable | 5,810,328 | 5,665,487 |
Policy loans | 51,529 | 45,573 |
Total investments | 834,483,301 | 518,194,579 |
Cash and cash equivalents | 70,278,979 | 151,679,274 |
Deferred acquisition costs, net | 21,419,245 | 13,456,303 |
Premiums receivable | 333,835 | 313,601 |
Accrued investment income | 10,448,869 | 6,806,836 |
Reinsurance recoverables (See Note 9) | 45,237,046 | 32,146,042 |
Intangible assets | 700,000 | 700,000 |
Property and equipment, net | 114,434 | 103,964 |
Operating lease right of use assets | 287,660 | 348,198 |
Other assets | 3,114,239 | 1,533,179 |
Assets associated with business held for sale (See Note 2) | 1,058,180 | 1,118,783 |
Total assets | 987,475,788 | 726,400,759 |
Liabilities: | ||
Benefit reserves | 12,477,017 | 12,775,773 |
Policy claims | 159,118 | 161,703 |
Deposit-type contracts (See note 11) | 848,714,996 | 597,868,472 |
Advance premiums | 422 | 2,541 |
Deferred gain on coinsurance transactions | 24,872,873 | 18,198,757 |
Lease liabilities (See Note 13): | ||
Operating lease | 331,350 | 396,911 |
Other liabilities | 18,260,351 | 9,552,791 |
Liabilities associated with business held for sale (See Note 2) | 1,053,226 | 1,114,312 |
Total liabilities | 905,869,353 | 640,071,260 |
Contingencies and Commitments (See Note 12) | ||
Stockholders' Equity: | ||
Preferred stock, $0.001 par value; authorized 2,000,000 shares; no shares issued and outstanding as of June 30, 2021 or December 31, 2020 | ||
Voting common stock, $0.001 par value; authorized 20,000,000 shares; 3,737,564 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; non-voting common stock, $0.001 par value, 2,000,000 shares authorized; no shares issued and outstanding June 30, 2021 and December 31, 2020, respectively | 3,738 | 3,738 |
Additional paid-in capital | 135,232,817 | 133,592,605 |
Treasury stock | (175,333) | (175,333) |
Accumulated deficit | (60,115,614) | (53,522,078) |
Accumulated other comprehensive income | 6,660,827 | 6,430,567 |
Total stockholders' equity | 81,606,435 | 86,329,499 |
Total stockholders' equity | 81,606,435 | 86,329,499 |
Total liabilities and stockholders' equity | $ 987,475,788 | $ 726,400,759 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Assets | ||
Amortized Cost | $ 580,914,162 | $ 369,156,068 |
Equity securities cost | $ 46,887,832 | $ 0 |
Stockholders' Equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 3,737,564 | 3,737,564 |
Common stock, shares outstanding | 3,737,564 | 3,737,564 |
Non Voting Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Non Voting Common Stock, Shares Authorized | 2,000,000 | 2,000,000 |
Non Voting Common Stock, Shares Issued | 0 | 0 |
Non Voting Common Stock, Shares Outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenues | ||||
Premiums | $ 30 | $ 51 | ||
Investment income, net of expenses | 3,220,026 | (397,842) | 6,107,389 | 843,136 |
Net realized gain (loss) on investments (See Note 4) | 4,059,926 | (12,819,871) | (589,179) | 9,780,139 |
Amortization of deferred gain on reinsurance | 587,737 | 338,269 | 1,048,593 | 520,707 |
Service fee revenue, net of expenses | 671,804 | 385,674 | 1,109,950 | 765,892 |
Other revenue | 357,814 | 10,387 | 606,783 | 20,213 |
Total revenue (loss) | 8,897,307 | (12,483,353) | 8,283,536 | 11,930,138 |
Expenses | ||||
Interest credited | 3,931,216 | (128,052) | 1,584,813 | 83,150 |
Benefits | 4,016 | 79 | (3,087) | |
Amortization of deferred acquisition costs | 524,336 | 100,388 | 1,027,073 | 140,897 |
Salaries and benefits | 4,513,944 | 1,354,934 | 7,441,171 | 2,179,830 |
Other operating expenses | 4,174,196 | 2,305,687 | 2,644,899 | 3,630,800 |
Total expenses | 13,143,692 | 3,636,973 | 12,698,035 | 6,031,590 |
(Loss) income continuing from operations before taxes | (4,246,385) | (16,120,326) | (4,414,499) | 5,898,548 |
Income tax expense (See Note 8) | (746,689) | (479,513) | (2,179,037) | (887,429) |
Net (loss) income attributable to Midwest Holding, Inc. | (4,993,074) | (16,599,839) | (6,593,536) | 5,011,119 |
Comprehensive income (loss): | ||||
Unrealized gains (losses) on investments arising during the three months ended June 2021 and 2020, net of offsets, net of tax ($119,677 and $4.9 million, respectively); unrealized gains (losses) on investments arising during the six months ended June 2021 and 2020, net of offsets, net of tax ($61,207 and $1.6 million, respectively) | 373,392 | 6,673,662 | 1,336,272 | 2,502,690 |
Unrealized losses on foreign currency | (976) | (406,255) | ||
Less: Reclassification adjustment for net realized gains on investments, net of tax for the three months ended June 20, 2021 and 2020 ($208,655 and $216,772, respectively), and net of tax for the six months ended June 20, 2021 and 2020 ($294,004 and $242,962, respectively) | (784,942) | 12,819,871 | (1,106,012) | (9,780,139) |
Other comprehensive (loss) income | (411,550) | 19,492,557 | 230,260 | (7,683,704) |
Comprehensive (loss) income | $ (5,404,624) | $ 2,892,718 | $ (6,363,276) | $ (2,672,585) |
Earnings (loss) income per common share | ||||
Basic | $ (1.34) | $ (6.53) | $ (1.76) | $ 2.19 |
Diluted | $ (1.34) | $ (6.53) | $ (1.76) | $ 2.18 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Unrealized gains (losses) on investments arising during period, net of tax | $ 119,677 | $ 4,900,000 | $ 61,207 | $ 1,600,000 |
Reclassification adjustment for net realized gains on investments, net of tax | $ 208,655 | $ 216,772 | $ 294,004 | $ 242,962 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Treasury Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | AOCI | Noncontrolling Interest. | Total |
Balance at Dec. 31, 2019 | $ 2,043 | $ 54,494,354 | $ (41,081,710) | $ 619,584 | $ 124,477 | $ 14,158,748 | |
Net gain (loss) | 5,011,119 | 5,011,119 | |||||
Capital raise, net of $285,468 related expenses | 676 | 14,940,857 | 14,941,533 | ||||
Employee stock options | 25,022 | 25,022 | |||||
Purchase of remaining 49% of 1505 Capital LLC | (375,523) | (124,477) | (500,000) | ||||
Unrealized gains on investments, net of taxes | (7,277,449) | (7,277,449) | |||||
Unrealized losses on foreign currency | (406,255) | (406,255) | |||||
Balance at Jun. 30, 2020 | 2,719 | 69,084,710 | (36,070,591) | (7,064,120) | 25,952,718 | ||
Balance at Dec. 31, 2019 | 2,043 | 54,494,354 | (41,081,710) | 619,584 | 124,477 | 14,158,748 | |
Balance at Dec. 31, 2020 | $ (175,333) | 3,738 | 133,592,605 | (53,522,078) | 6,430,567 | 86,329,499 | |
Balance at Mar. 31, 2020 | 2,043 | 54,506,288 | (19,533,252) | (26,556,674) | 186,977 | 8,605,382 | |
Net gain (loss) | (16,599,839) | (16,599,839) | |||||
Capital raise, net of $285,468 related expenses | 676 | 14,940,857 | 14,941,533 | ||||
Employee stock options | 13,088 | 13,088 | |||||
Purchase of remaining 49% of 1505 Capital LLC | (375,523) | 62,500 | $ (186,977) | (500,000) | |||
Unrealized gains on investments, net of taxes | 19,493,534 | 19,493,534 | |||||
Unrealized losses on foreign currency | (980) | (980) | |||||
Balance at Jun. 30, 2020 | 2,719 | 69,084,710 | (36,070,591) | (7,064,120) | 25,952,718 | ||
Balance at Dec. 31, 2020 | (175,333) | 3,738 | 133,592,605 | (53,522,078) | 6,430,567 | 86,329,499 | |
Net gain (loss) | (6,593,536) | (6,593,536) | |||||
Additional capital raise related expenses | (129,355) | (129,355) | |||||
Employee stock options | 1,769,567 | 1,769,567 | |||||
Unrealized gains on investments, net of taxes | 230,260 | 230,260 | |||||
Balance at Jun. 30, 2021 | (175,333) | 3,738 | 135,232,817 | (60,115,614) | 6,660,827 | 81,606,435 | |
Balance at Mar. 31, 2021 | (175,333) | 3,738 | 133,853,945 | (55,122,540) | 7,072,373 | 85,632,183 | |
Net gain (loss) | (4,993,074) | (4,993,074) | |||||
Additional capital raise related expenses | (129,355) | (129,355) | |||||
Employee stock options | 1,508,227 | 1,508,227 | |||||
Unrealized gains on investments, net of taxes | (411,546) | (411,546) | |||||
Balance at Jun. 30, 2021 | $ (175,333) | $ 3,738 | $ 135,232,817 | $ (60,115,614) | $ 6,660,827 | $ 81,606,435 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Issuance costs | $ 285,468 | $ 285,468 |
1505 Capital LLC | ||
Ownership percentage acquired | 49.00% | 49.00% |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash Flows from Operating Activities: | ||
Net (loss) income attributable to Midwest Holding, Inc. | $ (6,593,536) | $ 5,011,119 |
Adjustments to arrive at cash provided by operating activities: | ||
Net premium and discount on investments | (438,382) | 104,947 |
Depreciation and amortization | 25,405 | 804,289 |
Stock options | 1,769,567 | 25,022 |
Amortization of deferred acquisition costs | 1,027,073 | 140,897 |
Deferred acquisition costs capitalized | (9,041,477) | (4,118,436) |
Net realized losses (gains) on investments | 589,179 | (9,780,139) |
Deferred coinsurance ceding commission | 6,674,116 | 3,908,889 |
Changes in operating assets and liabilities: | ||
Reinsurance recoverables | (13,529,299) | (4,304,381) |
Interest and dividends due and accrued | (3,642,033) | (1,960,229) |
Premiums receivable | (20,234) | 6,310 |
Policy liabilities | 7,333,531 | 3,958,101 |
Other assets and liabilities | 7,121,121 | 8,678,265 |
Other assets and liabilities - discontinued operations | (483) | 6,280 |
Net cash (used for) provided by operating activities | (8,725,452) | 2,480,934 |
Fixed maturities available for sale: | ||
Purchases | (342,717,164) | (107,759,107) |
Proceeds from sale or maturity | 132,752,125 | 18,409,038 |
Mortgage loans on real estate, held for investment | ||
Purchases | (51,978,684) | (35,531,866) |
Proceeds from sale | 16,596,586 | 2,069,950 |
Derivatives | ||
Purchases | (9,850,552) | (2,643,989) |
Proceeds from sale | 3,062,687 | |
Purchase of equity securities | (46,924,170) | |
Other invested assets | ||
Purchases | (32,291,974) | (7,011,102) |
Proceeds from sale | 16,915,404 | 5,612,112 |
Purchase of restricted common stock in FHLB | (500,000) | |
Preferred stock | (778,681) | |
Notes receivable | (5,488,101) | |
Net change in policy loans | (5,956) | (35,158) |
Net purchases of property and equipment | (34,642) | (45,513) |
Net cash used in investing activities | (315,755,021) | (132,423,736) |
Cash Flows from Financing Activities: | ||
Finance lease | (111) | |
Captital contribution | (129,355) | 14,941,533 |
1505 Capital LLC purchase | (500,000) | |
Receipts on deposit-type contracts | 249,519,268 | 147,486,013 |
Withdrawals on deposit-type contracts | (6,309,735) | (658,936) |
Net cash provided by financing activities | 243,080,178 | 161,268,499 |
Net (decrease) increase in cash and cash equivalents | (81,400,295) | 31,325,697 |
Cash and cash equivalents: | ||
Beginning | 151,679,274 | 43,716,205 |
Ending | 70,278,979 | $ 75,041,902 |
Supplementary information | ||
Cash paid for taxes | $ 1,500,000 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Nature of Operations and Basis of Presentation | Note 1. Nature of Operations and Basis of Presentation Nature of Operations Midwest Holding Inc. (āMidwest,ā āthe Company,ā āwe,ā āour,ā or āusā) was incorporated in Nebraska on October 31, 2003 for the primary purpose of operating a financial services company. The Company redomesticated from the State of Nebraska to the State of Delaware on August 27, 2020. The Company is in the life and annuity insurance business and operates through its wholly owned subsidiaries, American Life & Security Corp. (āAmerican Lifeā), and 1505 Capital LLC (ā1505 Capitalā) as well as through its sponsored captive reinsurance company, Seneca Reinsurance Company, LLC (āSeneca Reā). American Life is a Nebraska-domiciled life insurance company, which is also commercially domiciled in Texas, that is currently licensed to sell, underwrite, and market life insurance and annuity products in 21 states and the District of Columbia. Effective March 12, 2020, Seneca Reinsurance Company, LLC (āSeneca Reā), a Vermont limited liability company, was formed by Midwest to operate as a sponsored captive insurance company for the purpose of insuring and reinsuring various types of risks of its participants through one or more protected cells and to conduct any other business or activity that is permitted for sponsored captive insurance companies under Vermont insurance regulations. On March 30, 2020, Seneca Re received its Certification of Authority to transact the business of a captive insurance company. On May 12, 2020, Midwest contributed $300,000 to Seneca Re for a 100% ownership interest. On April 2, 2019, we obtained a 51% ownership in 1505 Capital, a Delaware limited liability company, that was established in 2018 to provide financial and investment advisory and management services to clients and related investment activities. On June 15, 2020, we purchased the remaining 49% ownership in 1505 Capital for $500,000. 1505 Capitalās financial results have been consolidated with the Companyās since the date of its acquisition. On July 27, 2020, American Life entered into a reinsurance agreement (the āReinsurance Agreementā) with a new protected cell formed by Seneca Re (Seneca Incorporated Cell, LLC 2020-02 (āSRC2ā)). SRC2 was capitalized by Crestline Management, L.P. (āCrestlineā), a significant shareholder of Midwest. The Reinsurance Agreement, which is effective as of April 24, 2020, was entered into pursuant to a Master Letter Agreement (the āMaster Agreementā) dated and effective as of April 24, 2020, among American Life, Seneca Re and Crestline. The Reinsurance Agreement supports American Lifeās new business production by providing reinsurance capacity for American Life to write certain kinds of fixed and multi-year guaranteed annuity products. Concurrently with the Reinsurance Agreement: ā ā American Life and the Reinsurer each entered into investment management agreements with Crestline, pursuant to which Crestline will manage the assets that support the reinsured business; and ā American Life and the Reinsurer entered into a trust agreement whereby the Reinsurer maintains for American Lifeās benefit a trust account that supports the reinsured business. ā In addition, pursuant to the Master Agreement, the parties thereto have agreed to enter into a separate agreement whereby, among other things and subject to certain conditions, American Life will agree to reinsure additional new business production to one or more reinsurers formed and/or capitalized by Crestline, Midwest or an appropriate affiliate will refer potential advisory clients to Crestline, and American Life will consider investing in certain assets originated or sourced by Crestline. ā On April 24, 2020, Midwest entered into a Securities Purchase Agreement with Crestline Assurance Holdings LLC, a Delaware limited liability company (āCrestline Assuranceā), Xenith, and Vespoint, and pursuant to the agreement, Crestline Assurance purchased 444,444 shares of the Companyās voting common stock, par value $0.001 per share (ācommon stockā), at a purchase price of $22.50 per share for $10.0 million. Under the agreement, the Company contributed $5.0 million to American Life. Also, effective as of April 24, 2020, in a separate transaction, Midwest sold 231,655 shares of common stock to various investors at $22.50 per share for $5.227 million. Also, effective April 24, 2020, American Life entered into a Master Letter Agreement with Seneca Re and Crestline Management regarding a flow of annuity reinsurance and related asset management, whereby Crestline Management agreed to provide reinsurance funding for a quota share percentage of 25% of the liabilities of American Life arising from its multi-year guaranteed annuities (āMYGAā) and a quota share percentage of 40% for American Lifeās fixed indexed annuity (āFIAā) products. This agreement expires on April 24, 2023. In December 2020, the Company completed a public offering of its common stock for gross proceeds of $70,000,000 (see Note 17). In connection therewith, the Company's common stock was approved for listing and began trading on the Nasdaq Capital Market (āNASDAQā) upon the closing of the public offering. Management evaluates the Company as one reporting segment in the life insurance industry. The Company is primarily engaged in the underwriting and marketing of annuity products and life insurance through American Life, and then reinsuring such products with third-party reinsurers, and since May 13, 2020, with Seneca Re protected cells. The Companyās historical product offerings consisted of a multi-benefit life insurance policy that combined cash value life insurance with a tax deferred annuity and a single premium term life product. These product offerings were underwritten, marketed, and managed as a group of similar products on an overall portfolio basis. American Life presently offers five products, two MYGA, a FIA, and two bonus plans associated with the FIA product. It is not presently offering any traditional life insurance products. Basis of Presentation These consolidated financial statements for the three and six months ended June 30, 2021 and 2020 and year ended December 31, 2020 have been prepared in conformity with generally accepted accounting principles in the United States of America (āGAAPā). All intercompany accounts and transactions have been eliminated in consolidation and certain immaterial reclassifications have been made to the prior period results to conform to the current periodās presentation with no impact on results of operations or total stockholdersā equity. The information contained in the āNotes to Consolidated Financial Statementsā included in the Companyās Annual Report on Form 10-K for the year ended December 31, 2020 (ā2020 Form 10-Kā), should be read in conjunction with the reading of these interim unaudited consolidated financial statements. ā The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2021. Investments All fixed maturities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Premiums and discounts on fixed maturity debt instruments are amortized using the scientific-yield method over the term of the bonds. Realized gains and losses on securities sold during the year are determined using the specific identification method. Unrealized holding gains and losses, net of applicable income taxes, are included in accumulated other comprehensive income. Declines in the fair value of available-for-sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, the Company considers severity of impairment, duration of impairment, forecasted recovery period, industry outlook, the financial condition of the issuer, issuer credit ratings, and the intent and ability of the Company to hold the investment until the recovery of the cost. The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the statement of comprehensive income as an impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security, and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the impairment is bifurcated. The Company recognizes the credit loss portion as realized losses and the noncredit loss portion in accumulated other comprehensive loss. The credit component of other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Companyās best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. The Company had no impairment to recognize as of June 30, 2021. As of December 31, 2020, the Company analyzed its securities portfolio and determined that an impairment of approximately $35,000 should be recorded for one debt security, an impairment of $500,000 was recognized on a preferred stock, and a valuation allowance of $776,973 established on one lease. The valuation allowance on the lease of $776,973 was released as of March 31, 2021 due to the sale of the investment. The remaining investments were not impaired as of December 31, 2020. Investment income consists of interest, dividends, gains and losses from equity method investments, and real estate income, which are recognized on an accrual basis along with the amortization of premiums and discounts. Certain available-for-sale investments are maintained as collateral under funds withheld (āFWā) and modified coinsurance (āModcoā) agreements but the assets and total returns or losses on the asset portfolios belong to the third-party reinsurers. American Life has treaties with several third-party reinsurers that have funds withheld and modified coinsurance provisions. In a Modco agreement, the ceding entity retains the assets equal to the modified coinsurance reserves retained. In a FW agreement, assets that would normally be paid over to a reinsurer are withheld by the ceding company to permit statutory credit for unauthorized reinsurers to reduce the potential credit risk. The unrealized gains/losses on those investments are passed through to the third-party reinsurers as either a realized gain or loss on the Consolidated Statements of Comprehensive (Loss) Income. Mortgage loans on real estate, held for investment Mortgage loans on real estate held for investment are carried at unpaid principal balances. Interest income on mortgage loans on real estate, held for investment, is recognized in net investment income at the contract interest rate when earned. A mortgage loan is considered to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the mortgage agreement. Valuation allowances on mortgage loans are established based upon losses expected by management to be realized in connection with future dispositions or settlements of mortgage loans, including foreclosures. The Company establishes valuation allowances for estimated impairments on an individual loan basis as of the balance sheet date. Such valuation allowances are based on the excess carrying value of the loan over the present value of expected future cash flows discounted at the loanās original effective interest rate. These evaluations are revised as conditions change and new information becomes available. No such valuation allowance was established as of June 30, 2021 or as of December 31, 2020. Derivative Instruments Derivatives are used to hedge the risks experienced in our ongoing operations, such as equity, interest rate, and cash flow risks, or for other risk management purposes, which primarily involve managing liability risks associated with our indexed annuity products and reinsurance agreements. Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, or other underlying notional amounts. Derivative assets and liabilities are carried at fair value on the Consolidated Balance Sheets. To qualify for hedge accounting, at the inception of the hedging relationship, we formally document our designation of the hedge as a cash flow or fair value hedge and our risk management objective and strategy for undertaking the hedging transaction. In this documentation, we identify how the hedging instrument is expected to hedge the designated risks related to the hedged item, the method to be used to retrospectively and prospectively assess the hedging instrumentās effectiveness and the method which would be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship. During the last quarter of 2020, the Company began investing in foreign currency futures to hedge the fluctuations in the foreign currency. The formal documentation and hedge effectiveness was not completed at the date we entered into those futures contracts; therefore, they do not qualify for hedge accounting. The futures fair market values were recorded on our Consolidated Statements of Comprehensive (Loss) Income as realized gains or (losses). Additionally, reinsurance agreements written on a FW or Modco basis contain embedded derivatives on our fixed indexed annuity product. Gains or (losses) associated with the performance of assets maintained in the Modco deposit and FW accounts are reflected as realized gains or (losses) in Consolidated Statements of Comprehensive (Loss) Income. Equity Securities Equity securities at June 30, 2021 and 2020 consist of exchange traded funds (āETFsā). The ETFās are carried at fair value with the change in fair value recorded through realized gains and losses on the statement of operations. As of June 30, 2021 we had purchased $46.9 million of ETFs. Federal Home Loan Bank (FHLB) stock ā American Life purchased Federal Home Loan Bank of Topeka (āFHLBā) common stock on May 5, 2021. This investment was to solidify our membership with FHLB Topeka. The carrying value of FHLB stock approximates fair value since the Company can redeem such stock with FHLB at cost. As a member of the FHLB, the Company is required to purchase this stock, which is carried at cost and classified as restricted equity securities. Other Invested Assets The Company purchases and sells equipment leases in its investment portfolio. Other invested assets also consists of approximately $13.2 million of various assets entered into by one of our investment managers. Of this total, about $11.0 million are non-registered private funds with underlying assets with characteristics of bonds. The remaining assets are student loan funding pools, joint ventures, other corporate assets, and private equity funds. Additionally, the Company entered into a fund investment on November 3, 2020 for $15.8 million with an additional $3.9 million invested on December 16, 2020. At December 31, 2020, we had a $19.7 million investment in the fund. Effective January 2021, this investment was repackaged into a special purpose vehicle between American Life and PF Collinwood Holdings, LLC (āPFCā) with American Life owning 100% of the entity. No gain or loss was recognized from the repackaging of PFC. The value of PFC as of June 30, 2021 was $16.9 million. Investment escrow The Company held in escrow $0 and $3,174,047 as of June 30, 2021 and of December 31, 2020, respectively. The cash held at year end was used to settle other invested assets that closed in January 2021, respectively . Preferred Stock The Company impaired in full a preferred stock investment as of December 31, 2020. This was recorded as a reduction of the asset on the Consolidated Balance Sheets and a bad debt expense on the Consolidated Statements of Comprehensive (Loss) Income. In 2020 American Life entered into a series of transactions with Ascona Group Holdings Ltd (āAGHā). One of the transactions involved the acquisition of Pound Sterling (āGBPā) 3,642,090 of preferred equity in Ascona Group Holdings Limited (āthe Preferred Equityā) along with warrants bearing no initial assigned value (the āWarrantsā) as of September 28, 2020. American Life initially created a special purpose vehicle called Ascona Asset Holding LLC (āAAHā) to hold the Preferred Equity and Warrants, and later created Ascona Collinwood HoldCo LLC (āACHā) to be the sole member of AAH. American Life and Crestline Re SP1 own 74% and 26%, respectively, of ACH. We are carrying the preferred equity at a market value of $4.7 million as of June 30, 2021 and $3.9 million as of December 31, 2020. The warrants have no market value as of June 30, 2021 and December 31, 2020. ā Notes receivable The Company held in notes receivable as of June 30, 2021 and December 31, 2020, a note of $5,810,328 and $5,665,487, respectively, between American Life and a related party. The note receivable is between American Life and Chelsea Holdings Midwest LLC with an interest rate of 5% per annum that was rated BBB+ by a nationally recognized statistical rating organization (āNRSROā). This note matures in 50 years on June 18, 2050. This note is being carried at the fair market value. Policy loans Cash and cash equivalents The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of June 30, 2021 and December 31, 2020, the Company held approximately GBP 963,930 and GBP 505,349 in custody accounts, respectively. The USD equivalent held was approximately $1,170,660 and $690,787, respectively. As of June 30, 2021 and December 31, 2020, the Company held approximately EUR 620,750 and EUR 87,633, respectively. The USD equivalent held was approximately $736,000 and $107,000, respectively. As of June 30, 2021 and December 31, 2020, we had losses of approximately $65,000 and gains of approximately $45,000, respectively, related to the change in the foreign currency exchange rate of the GBP and EUR that were recorded in realized (losses) gains on investments in the Consolidated Statements of Comprehensive (Loss) Income. The Company had money market investments of approximately $42.8 million and $100.6 million at June 30, 2021 and December 31, 2020, respectively. Deferred acquisition costs Deferred acquisition costs (āDACā) consist of incremental direct costs, net of amounts ceded to third-party reinsurers, that result directly from and are essential to the contract acquisition transaction and would not have been incurred by the Company had the contract acquisition not occurred. These costs are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions. Recoverability of DAC is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense. The Company performs a recoverability analysis annually in the fourth quarter of each calendar year unless events occur which require an immediate review. The Company determined that no events occurred in the six months ended June 30, 2021 that suggest a review should be undertaken. The Company performed a recoverability analysis during the fourth quarter of 2020 and determined that all DAC balances were recoverable as of December 31, 2020. Property and equipment Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 During the first quarter of 2021, the Company started the implementation of a new cloud-based enterprise resource planning (āERPā) and enterprise performance management (āEPMā) system (āOracleā). The Company expects to capitalize an estimated $505,000 of consultation and support expenses from two vendors. The Company will begin amortizing these fees over a period of 5 years from the date of implementation. The useful life of the system has been estimated at 5 years in accordance with guidance in ASC 350, Intangibles ā Goodwill and Other Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the six months ended June 30, 2021 that would indicate the carrying amounts may not be recoverable. Reinsurance In the normal course of business, the Company seeks to limit any single exposure to losses on large risks by purchasing reinsurance. The amounts reported in the Consolidated Balance Sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. The Company generally strives to diversify its credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Companyās primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices and commutations, and establishes allowances for uncollectible reinsurance recoverable as appropriate. There were no allowances established as of June 30, 2021 or December 31, 2020. We expect to reinsure substantially all of our new insurance policies with a variety of reinsurers in exchange for upfront ceding commissions, expense reimbursements and administrative fees. Under these reinsurance agreements, we expect there will be a monthly or quarterly settlement of premiums, claims, surrenders, collateral, and other administration fees. We believe this strategy will help preserve American Lifeās capital while supporting its growth because American Life will have lower capital requirements when its business is reinsured due to lower overall financial exposure versus retaining the insurance policy business itself. See Note 9 below for further discussion of our reinsurance activities. There are two main categories of reinsurance transactions: 1) āindemnity,ā where we cede a portion of our risk but retain the legal responsibility to our policyholders should our reinsurers not meet their financial obligations; and 2) āassumption,ā where we transfer the risk and legal responsibilities to the reinsurers. The reinsurers are required to acquire the appropriate regulatory and policyholder approvals to convert indemnity policies to assumption policies. Our reinsurers may be domestic or foreign capital markets investors or traditional reinsurance companies seeking to assume U.S. insurance business. We plan to mitigate the credit risk relating to reinsurers generally by requiring other financial commitments from the reinsurers to secure the reinsured risks (such as posting substantial collateral). It should be noted that under indemnity reinsurance agreements American Life remains exposed to the credit risk of its reinsurers. If one or more reinsurers become insolvent or are otherwise unable or unwilling to pay claims under the terms of the applicable reinsurance agreement, American Life retains legal responsibility to pay policyholder claims, which, in such event would likely materially and adversely affect the capital and surplus of American Life. As indicated above under āNature of Operations,ā Midwest formed Seneca Re in early 2020. On April 15, 2020, Midwest entered into an operating agreement with Seneca Re and as of June 30, 2021, Seneca Re has one incorporated cell, Seneca Incorporated Cell, LLC 2020-01 (āSRC1ā) which was consolidated in our financial statements. As set forth under āNature of Operations,ā effective December 8, 2020, American Life entered into a novation agreement with SRC2 and Crestline Re SPC, for and on behalf of Crestline Re SP1, under which the above-described reinsurance, trust and related asset management agreements were novated and replaced with substantially similar agreements entered into by American Life and Crestline Re SP1. Some reinsurers are not and may not be āaccreditedā or qualified as reinsurers under Nebraska Law. In order to enter into reinsurance agreements with such reinsurers and to reduce potential credit risk, American Life holds a deposit or withholds funds from the reinsurer or requires the reinsurer to maintain a trust that holds assets backing up the reinsurerās obligation to pay claims on the business it assumes. The reinsurer may also appoint an investment manager for such funds, which in some cases may be our investment adviser subsidiary, 1505 Capital, to manage these assets pursuant to guidelines adopted by us that are consistent with Nebraska investment statutes and reinsurance regulations. American Life currently has treaties with several third-party reinsurers and one related party reinsurer. Of the third-party reinsurers, only four have FW or Modco provisions. In a Modco arrangement, the ceding entity retains the assets equal to the modified coinsurance reserves retained. In a FW agreement, assets that would normally be paid over to a reinsurer are withheld by the ceding company to permit statutory credit for unauthorized reinsurers, to reduce the potential credit risk. Under those provisions with third-party reinsurers, the assets backing the treaties are maintained by American Life as investments but the assets and total returns or losses on the investments are owned by the reinsurers. Under GAAP, this arrangement is considered an embedded derivative as discussed in Comprehensive (Loss) Income and Note 5 below. Assets carried as investments on American Lifeās financial statements for the third-party reinsurers contained unrealized gains of approximately $3.3 million and $2.9 million as of June 30, 2021 and December 31, 2020, respectively. The terms of the contracts with the third-party reinsurers provide that unrealized gains on the portfolios accrue to the third-party reinsurers. Accordingly, the unrealized gains on the assets held by American Life were offset by losses in the embedded derivative of $440,000 and $2.9 million as of June 30, 2021 and December 31, 2020, respectively. We account for this unrealized loss pass-through by recording equivalent realized losses on our Consolidated Statements of Comprehensive (Loss) Income and in amount payable to our third-party reinsurers on the Consolidated Balance Sheets. For further discussion see Note 5. Derivative Instruments below. Benefit reserves The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables. Policy claims Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure. Deposit-type contracts Deposit-type contracts consist of amounts on deposit associated with deferred annuities, premium deposit funds and supplemental contracts without life contingencies. Deferred gain on coinsurance transactions American Life has entered into several reinsurance contracts where it has earned or is earning ceding commissions. These ceding commissions are recorded as a deferred liability and amortized over the life of the business ceded. American Life receives commission, administrative, and option allowances from reinsurance transactions that represent recovery of acquisition costs. These allowances first reduce the DAC associated with the reinsured blocks of business with the remainder being included in the deferred gain on coinsurance transactions that is also being amortized. Income taxes The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state, or local tax examinations by tax authorities for the years before 2017. The Company is not currently under examination for any open years. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. Deferred tax assets are recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. Revenue recognition and related expenses Amounts received as payment for annuities are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services and cost of insurance, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows. Revenues from ceding commissions on traditional life and annuity products are deferred on the Consolidated Balance Sheets and amortized over the life of the policies. Revenues on |
Assets and Liabilities Associat
Assets and Liabilities Associated with Business Held for Sale | 6 Months Ended |
Jun. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets and Liabilities Associated with Business Held for Sale | Note 2. Assets and Liabilities Associated with Business Held for Sale On November 30, 2018, American Life entered into an Assumption and Indemnity Reinsurance Agreement (āReinsurance Agreementā) with Unified Life Insurance Company (āUnifiedā), an unaffiliated Texas domiciled stock insurance company. The Reinsurance Agreement provided that American Life would cede and Unified would agree to reinsure, on an indemnity reinsurance basis, 100% of the liabilities and obligations under substantially all of American Lifeās life, annuity, and health policies (āPoliciesā). The Agreement closed on December 10, 2018, as previously disclosed in Midwestās Current Report on Form 8-K filed with the Securities and Exchange Commission (āSECā) on December 12, 2018. The effective date of the Agreement was July 1, 2018. After the closing of the Reinsurance Agreement, Unified began the process of preparing and delivering certificates of assumption and other materials to policyholders of American Life in order to effect an assumption of the Policies by Unified such that all of American Lifeās rights and obligations under the policies arising on and after July 1, 2018 would be completely assumed by Unified without further indemnification or other obligations, except for liabilities, claims and obligations incurred before July 1, 2018. Unified is obligated to indemnify American Life against all liabilities and claims and all of its policy obligations from and after July 1, 2018. As of June 30, 2021 and December 31, 2020, 90% and 89%, respectively, of the indemnity policies were converted to assumptive policies thereby releasing American Life from all of its legal obligations related to those policies. The consideration paid by Unified to American Life under the Reinsurance Agreement upon closing was $3,500,000 (āCeding Commissionā), subject to minor settlement adjustments. At closing, American Life transferred the statutory reserves and liabilities directly related to the policies to Unified. The Ceding Commission is being amortized on a straight-line basis over the life of the policies. When the policies are converted to assumptive, meaning American Life has no liability exposure for those policies, the remaining Ceding Commission is recognized in our Consolidated Statements of Comprehensive (Loss) Income. Ceding Commission amortized for the three months ended June 30, 2021 and 2020 was $12,348 and $211,436, respective. Ceding Commission amortized for the six months ended June 30, 2021 and 2020 was $19,976 and $278,886, respectively. Our Consolidated Balance Sheets were required to be restated under GAAP for all periods shown with the assets and liabilities which were ceded by American Life to Unified into separate line items as assets and liabilities held for sale. The table below summarizes the assets and liabilities that are included in discontinued operations as of June 30, 2021 and as of December 31, 2020: ā ā ā ā ā ā ā ā ā ā As of June 30, ā As of December 31, ā 2021 2020 Carrying amounts of major classes of assets included as part of discontinued operations: ā ā Policy loans ā $ 24,985 ā $ 33,161 Reinsurance recoverables ā 1,014,680 ā 1,061,979 Premiums receivable ā 18,515 ā 23,643 Total assets held for sale in the Consolidated Balance Sheets ā $ 1,058,180 ā $ 1,118,783 ā ā ā ā ā ā ā Carrying amounts of major classes of liabilities included as part of discontinued operations: ā ā Benefit reserves ā $ 563,218 ā $ 594,710 Policy claims ā 36,747 ā 35,302 Deposit-type contracts ā 451,899 ā 482,966 Advance premiums ā 159 ā 71 Accounts payable and accrued expenses ā 1,203 ā 1,263 Total liabilities held for sale in the Consolidated Balance Sheets ā $ 1,053,226 ā $ 1,114,312 ā |
Non-controlling Interest
Non-controlling Interest | 6 Months Ended |
Jun. 30, 2021 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interest | Note 3. Non-controlling Interest ā On April 2, 2019, Midwest entered into a contract to acquire a 51% controlling ownership in 1505 Capital LLC (ā1505 Capitalā), a Delaware limited liability company. 1505 Capital was organized to provide financial and investment advisory and management services to clients and any related investment, trading, or financial activities. Midwest purchased for $1.00 its 51% ownership and on June 15, 2020, purchased the remaining 49% ownership in 1505 Capital for $500,000. ā |
Investments
Investments | 6 Months Ended |
Jun. 30, 2021 | |
Marketable Securities [Abstract] | |
Investments | ā ā Note 4. Investments ā The amortized cost and estimated fair value of investments as of June 30, 2021 and December 31, 2020 were as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross ā Gross ā ā ā ā ā Amortized ā Unrealized ā Unrealized ā Estimated ā Cost Gains Losses Fair Value June 30, 2021: ā ā ā ā Fixed maturities: ā ā ā ā U.S. government obligations ā $ 1,946,573 ā $ 60,537 ā $ 3,976 ā $ 2,003,134 Mortgage-backed securities ā 40,399,566 ā 896,057 ā 6,208 ā 41,289,415 Collateralized loan obligations ā ā 319,085,884 ā ā 5,352,514 ā ā 340,837 ā ā 324,097,561 States and political subdivisions -- general obligations ā 105,923 ā 12,261 ā ā ā 118,184 States and political subdivisions -- special revenue ā 5,417,397 ā 1,112,529 ā 3,800 ā 6,526,126 Trust preferred ā ā 16,291,342 ā ā 200,973 ā ā 26,400 ā ā 16,465,915 Corporate ā 197,667,477 ā 2,255,997 ā 1,562,548 ā 198,360,926 Total fixed maturities ā $ 580,914,162 ā $ 9,890,868 ā $ 1,943,769 ā $ 588,861,261 Mortgage loans on real estate, held for investment ā ā 130,372,068 ā ā ā ā ā ā ā ā 130,372,068 Derivatives ā ā 12,913,546 ā ā 4,992,636 ā ā 1,483,788 ā ā 16,422,394 Federal Home Loan Bank (FHLB) stock ā ā 500,000 ā ā ā ā ā ā ā ā 500,000 Other invested assets ā ā 40,490,291 ā ā 1,591,080 ā ā 1,268,195 ā ā 40,813,176 Notes receivable ā ā 5,810,328 ā ā ā ā ā ā ā ā 5,810,328 Policy loans ā ā 51,529 ā ā ā ā ā ā ā ā 51,529 Total investments ā $ 771,051,924 ā $ 16,474,584 ā $ 4,695,752 ā $ 782,830,756 ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2020: ā ā ā ā Fixed maturities: ā ā ā ā ā ā ā ā ā ā ā ā U.S. government obligations ā ā 5,744,221 ā $ 426,427 ā $ 5,665 ā ā 6,164,983 Mortgage-backed securities ā ā 14,638,299 ā 276,219 ā 157,104 ā ā 14,757,414 Asset-backed securities ā ā 216,500,672 ā ā 5,623,083 ā ā 350,146 ā ā 221,773,609 States and political subdivisions -- general obligations ā ā 106,528 ā 10,802 ā ā ā ā 117,330 States and political subdivisions -- special revenue ā ā 5,293,365 ā 908,986 ā 147 ā ā 6,202,204 Trust preferred ā ā 2,218,142 ā ā 66,674 ā ā ā ā ā 2,284,816 Corporate ā ā 124,654,841 ā 1,379,513 ā 171,352 ā ā 125,863,002 Total fixed maturities ā ā 369,156,068 ā ā 8,691,704 ā ā 684,414 ā ā 377,163,358 Mortgage loans on real estate, held for investment ā ā 94,989,970 ā ā ā ā ā ā ā ā 94,989,970 Derivatives ā ā 8,532,252 ā ā 3,257,069 ā ā 428,287 ā ā 11,361,034 Other invested assets ā ā 21,897,130 ā ā ā ā ā ā ā ā 21,897,130 Investment escrow ā ā 3,174,047 ā ā ā ā ā ā ā ā 3,174,047 Notes receivable ā ā 5,665,487 ā ā ā ā ā ā ā ā 5,665,487 Policy loans ā ā 45,573 ā ā ā ā ā ā ā ā 45,573 Total investments ā $ 503,460,527 ā $ 11,948,773 ā $ 1,112,701 ā $ 514,296,599 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā Carrying ā ā ā Carrying ā ā ā Value Percent Value Percent AAA and U.S. Government ā $ 19,761,963 3.4 % $ 3,070,750 0.8 % AA ā 652,443 0.1 ā 5,818,163 1.5 ā A ā 105,264,686 17.9 ā 49,445,266 13.1 ā BBB ā 395,104,517 67.0 ā 247,635,730 65.7 ā Total investment grade ā 520,783,609 88.4 ā 305,969,909 81.1 ā BB and other ā 68,077,652 11.6 ā 71,193,449 18.9 ā Total ā $ 588,861,261 100.0 % $ 377,163,358 100.0 % ā Reflecting the quality of securities maintained by us, as of June 30, 2021 and December 31, 2020, 88.4% and 81.1%, respectively, of all fixed maturity securities were investment grade. The following table summarizes, for all fixed maturity securities in an unrealized loss position as of June 30, 2021 and December 31, 2020, the estimated fair value, pre-tax gross unrealized loss, and number of securities by consecutive months they have been in an unrealized loss position. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā ā ā ā Gross ā Number ā ā ā ā Gross ā Number ā ā Estimated ā Unrealized ā of ā Estimated ā Unrealized ā of ā Fair Value Loss Securities (1) Fair Value Loss Securities (1) Fixed Maturities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Less than 12 months: ā ā ā ā ā U.S. government obligations ā $ 13,087 ā $ 1,079 6 ā $ 54,910 ā $ 180 ā 2 Mortgage-backed securities ā 1,089,454 ā 6,208 2 ā 5,707,617 ā 157,104 ā 5 Collateralized loan obligations ā ā 51,350,944 ā ā 337,107 ā ā 59 ā ā 14,878,370 ā ā 246,969 ā ā 19 States and political subdivisions -- special revenue ā 532,613 ā 3,800 4 ā 5,584 ā 147 ā 1 Trust preferred ā ā 3,073,200 ā ā 26,400 ā ā 1 ā ā ā ā ā ā ā ā ā Corporate ā 75,670,436 ā 1,533,987 45 ā 3,859,616 ā 104,262 ā 7 Greater than 12 months: ā ā ā ā ā U.S. government obligations ā 74,180 ā 2,897 3 ā 119,700 ā 5,485 ā 4 Collateralized loan obligations ā 496,269 ā 3,730 1 ā 7,020,479 ā 103,177 ā 6 Corporate ā 323,741 ā ā 28,561 3 ā 287,473 ā ā 67,090 ā 3 Total fixed maturities ā $ 132,623,924 ā $ 1,943,769 124 ā $ 31,933,749 ā $ 684,414 ā ā 47 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā (1) We may reflect a security in more than one aging category based on various purchase dates. Our securities positions resulted in a gross unrealized loss position as of June 30, 2021 that was greater than the gross unrealized loss position at December 31, 2020 due to a decline in market values. We performed an analysis and determined that there were no indicators that we should perform a cash flow testing analysis and no impairment was required as of June 30, 2021. During the impairment analysis performed as of December 31, 2020 one of our assets had been in a loss position for over two years and had a decrease in its credit rating since 2019; cashflow testing on that security determined an impairment existed so we recorded an impairment of $35,000. As of June 30, 2021, management believed the Company would fully recover its cost basis in the remaining securities and management did not have the intent to sell, nor was it more likely than not that the Company will be required to sell, such securities until they recover or mature. ā The majority of the unrealized losses are related to our collateralized loan obligations (āCLOsā). CLOs are typically illiquid and are intended to be held to maturity. The Company has monitored the underlying unrealized losses and believes they pose minimal risk of material loss in the long-term due to the quality of the underlying credits. The loss on the CLOs as of June 30, 2021 and December 31, 2020 were related to interest rates and not credit related losses. See the discussion above under āComprehensive lossā in Note 1 regarding unrealized gains/losses on investments that are owned by our reinsurers and the corresponding offset carried as a gain in the associated embedded derivatives. ā The Company purchases and sells equipment leases in its investment portfolio. As of June 30, 2021, the Company owned several leases. An impairment analysis was completed on the only non-performing lease in the portfolio as of June 30, 2020 and it was determined that the underlying collateral value was substantially less than the outstanding remaining lease payments of $3.6 million. The Company recognized a valuation allowance as of June 30, 2020 of $776,973 on that asset. During March 2021, the non-performing asset was sold for a loss of $2.4 million. The valuation allowance was released and a loss of $2.4 million was recognized; however, this asset was held on behalf of a third-party reinsurer. Therefore, due to the terms of the reinsurance agreements, the loss was passed through to the third-party reinsurer by reducing its investment income earned. ā The amortized cost and estimated fair value of fixed maturities as of June 30, 2021, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. No securities due in the next year are in an unrealized loss position, further supporting managementās decision not to recognize an other-than-temporary impairment. ā ā ā ā ā ā ā ā ā ā Amortized ā Estimated ā Cost Fair Value Due in one year or less ā $ 20,656,659 ā $ 20,667,447 Due after one year through five years ā 136,423,479 ā 135,997,644 Due after five years through ten years ā 150,814,326 ā 153,866,190 Due after ten years through twenty years ā ā 214,535,543 ā ā 217,549,784 Due after twenty years ā ā 58,484,155 ā ā 60,780,196 ā ā $ 580,914,162 ā $ 588,861,261 ā The Company is required to hold assets on deposit for the benefit of policyholders in accordance with statutory rules and regulations. As of June 30, 2021 and December 31, 2020, these required deposits had a total amortized cost of $3,412,383 and $3,406,950 and fair values of $3,529,882 and $3,598,352, respectively. Mortgage loans consist of the following: ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā ā December 31, 2020 Industrial ā $ ā ā $ 1,250,000 Commercial mortgage loan - multi-family ā ā 62,824,086 ā ā 66,916,151 Other ā ā 67,547,982 ā ā 26,823,819 Total mortgage loans ā $ 130,372,068 ā $ 94,989,970 ā As of June 30, 2021, the commercial mortgages loans were secured by properties geographically dispersed (with the largest concentrations in loans secured by properties in Delaware (31%) New York (22%), Pennsylvania (9%), Arizona (7%), California (6%), and Europe (10%)). As of December 31, 2020, the commercial mortgages loans were secured by properties geographically dispersed (with the largest concentrations in New York (28%), Pennsylvania (14%), California (14%) and Europe (12%)). The loan-to-value ratio is expressed as a percentage of the amount of the loan relative to the value of the underlying property. A loan-to-value ratio in excess of 100% indicates the unpaid loan amount exceeds the underlying collateral. The following represents the loan-to-value ratio of the commercial mortgage loan portfolio, excluding those under development, net of valuation allowances. ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 Loan-to-Value Ratio: ā ā ā ā ā 0%-59.99% $ 108,636,962 ā $ 49,279,601 60%-69.99% ā 17,904,153 ā ā 22,349,295 70%-79.99% ā 3,830,953 ā ā 23,361,074 80% or greater ā ā ā ā ā Total mortgage loans $ 130,372,068 ā $ 94,989,970 ā ā The components of net investment income for the three and six months ended June 30, 2021 and 2020 were as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, ā 2021 2020 2021 2020 Fixed maturities ā $ 4,088,461 ā $ (128,209) ā $ 7,068,321 ā $ 1,041,929 Mortgage loans ā ā 366,717 ā ā ā ā ā 540,495 ā ā ā Other invested assets ā ā 96,054 ā ā ā ā ā 151,867 ā ā ā Other interest income ā 81,247 ā ā ā 152,165 ā ā Gross investment income ā 4,632,479 ā (128,209) ā 7,912,848 ā 1,041,929 Less: investment expenses ā (1,412,453) ā (269,633) ā (1,805,459) ā (198,793) Investment income, net of expenses ā $ 3,220,026 ā $ (397,842) ā $ 6,107,389 ā $ 843,136 ā Proceeds for the three months ended June 30, 2021 and 2020 from sales of fixed maturities classified as available-for-sale were $70,920,784 and $14,556,095, respectively. Gross gains of $1,280,793 and $1,038,822 and gross losses of $287,195 and $6,575 were realized on those sales during the three months ended June 30, 2021 and 2020, respectively. Proceeds for the six months ended June 30, 2021 and 2020 from sales of fixed maturities classified as available-for-sale were $132,752,125 and $18,409,038, respectively. Gross gains of $1,853,600 and $1,188,370 and gross losses of $453,581 and $31,407 were realized on those sales during the six months ended June 30, 2021 and 2020, respectively. The proceeds included those assets associated with the third-party reinsurers. The gains and losses relate only to the assets retained by American Life. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Note 5. Derivative Instruments The Company enters into derivative instruments to manage risk, primarily equity, interest rate, credit, foreign currency and market volatility. The following is a summary of the notional amount, number of contracts and fair value of our asset and liability derivatives of June 30, 2021 and December 31, 2020: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā Location in the ā ā ā ā ā ā ā ā ā ā ā ā ā Consolidated ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Derivatives Not Designated ā Statement of Notional ā Number of ā Estimated ā Notional ā Number of ā Estimated as Hedging Instruments ā Balance Sheets Amount ā Contracts ā Fair Value ā Amount ā Contracts ā Fair Value Equity-indexed options ā Derivatives $ 448,486,517 ā 399 ā $ 15,012,157 ā $ 272,853,853 ā 252 ā $ 11,361,034 Equity-indexed ā Deposit-type ā 442,680,823 ā 3,401 ā ā 100,561,244 ā ā 311,964,195 ā 2,101 ā ā 84,501,492 ā The following table summarizes the impact of unrealized (gains) going through AOCI on the investments related to the FW and MODCO provisions where the total return on the asset portfolio is passed through to the third-party reinsurer as embedded derivatives: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā Book Value ā Market Value ā Total Return ā Book Value ā Market Value ā Total Return Portfolio ā Assets ā Assets ā Swap Value ā Assets ā Assets ā Swap Value American Republic Insurance Company ā $ 28,157,500 ā $ 28,200,539 ā $ (43,039) ā $ ā ā $ ā ā $ ā Crestline Re SP1 ā ā 77,675,300 ā ā 79,279,242 ā ā (1,603,942) ā ā 62,162,766 ā ā 63,130,867 ā ā (968,101) Ironbound ā ā 105,981,525 ā ā 107,398,336 ā ā (1,416,811) ā ā 98,714,156 ā ā 99,747,812 ā ā (1,033,656) SDA ā ā 30,075,323 ā ā 30,139,665 ā ā (64,342) ā ā 27,224,279 ā ā 27,479,836 ā ā (255,557) US Alliance ā ā 38,142,204 ā ā 38,362,973 ā ā (220,769) ā ā 35,707,207 ā ā 36,360,501 ā ā (653,294) Total ā $ 280,031,852 ā $ 283,380,755 ā $ (3,348,903) ā $ 223,808,408 ā $ 226,719,016 ā $ (2,910,608) ā As of June 30, 2021 and December 31, 2020, the total return swap value was recorded as an increase of unrealized gains of $3.3 million and $2.9 million, respectively. The increase in our realized loss of $440,000 resulted in a decrease in our amounts recoverable from reinsurers on our Consolidated Balance Sheets since December 31, 2020 and a realized loss of $440,000 and realized loss of $2.9 million, for the six months ended June 30, 2021 and the year ended December 31, 2020, respectively, on our Consolidated Statements of Comprehensive (Loss) Income. |
Fair Values of Financial Instru
Fair Values of Financial Instruments | 6 Months Ended |
Jun. 30, 2021 | |
Investments, All Other Investments [Abstract] | |
Fair Values of Financial Instruments | Note 6. Fair Values of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. We use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entityās own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: ā Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. ā Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ā Level 3: Significant unobservable inputs that reflect a reporting entityās own assumptions about the assumptions that market participants would use in pricing an asset or liability. A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs, or their ability to be observed, may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the period in which the reclassifications occur. A description of the valuation methodologies used for assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Level 1 measurements Cash equivalents: ā Level 2 measurements Investment escrow: Fixed maturity securities: Derivatives: Equity securities Notes receivable Level 3 measurements Fixed maturity securities: ā Mortgage loans on real estate, held for investment: loans are generally stated at principal amounts outstanding, net of deferred expenses and allowance for loan loss. The Company determined that the net principal amount represents the fair value of the mortgages. Interest on loans is recognized on an accrual basis at the applicable interest rate on the principal amount outstanding. Loan origination fees and direct costs, as well as premiums and discounts, are amortized as level yield adjustments over the respective loan terms. Unamortized net fees or costs are recognized upon early repayment of the loans. Loan commitment fees are generally deferred and amortized on an effective yield basis over the term of the loan. Impaired loans are generally carried on a non-accrual status. Loans are ordinarily placed on non-accrual status when, in managementās opinion, the collection of principal or interest is unlikely, or when the collection of principal or interest is 90 days or more past due. ā Other invested assets: Other invested assets include equipment leases, non-registered private funds with underlying assets with characteristics of bonds, student loan funding pools, joint ventures, other corporate assets, and private equity funds . The inputs used to measure the fair value of these assets are classified as Level 3 within the fair value hierarchy. Federal Home Loan Bank (FHLB) stock: Preferred stock: ā Policy loans: ā Deposit-type contracts: Embedded derivative for equity-indexed contracts options purchased in the future by us to fund index credits beyond the next policy anniversary. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as assumptions used to project policy contract values. ā The following table presents the Companyās fair value hierarchy for those financial instruments measured at fair value as of June 30, 2021 and December 31, 2020. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Significant ā ā ā ā ā ā ā ā Quoted ā Other ā Significant ā ā ā ā ā In Active ā Observable ā Unobservable ā Estimated ā ā Markets ā Inputs ā Inputs ā Fair ā (Level 1) (Level 2) (Level 3) Value June 30, 2021 ā ā ā ā Financial assets ā ā ā ā ā ā ā ā ā ā ā ā Fixed maturity securities: ā ā ā ā U.S. government obligations ā $ ā ā $ 2,003,134 ā $ ā ā $ 2,003,134 Mortgage-backed securities ā ā ā ā ā 41,289,415 ā ā ā ā ā 41,289,415 Collateralized loan obligations ā ā ā ā ā 324,097,561 ā ā ā ā ā 324,097,561 States and political subdivisions ā general obligations ā ā ā 118,184 ā ā ā 118,184 States and political subdivisions ā special revenue ā ā ā 6,526,126 ā ā ā 6,526,126 Trust preferred ā ā ā ā ā 16,465,915 ā ā ā ā ā 16,465,915 Corporate ā ā ā 34,112,080 ā 164,248,846 ā 198,360,926 Total fixed maturity securities ā ā ā ā ā 424,612,415 ā ā 164,248,846 ā ā 588,861,261 Mortgage loans on real estate, held for investment ā ā ā ā ā ā ā ā 130,372,068 ā ā 130,372,068 Derivatives ā ā ā ā ā 16,422,394 ā ā ā ā ā 16,422,394 Equity securities ā ā ā ā ā 46,924,170 ā ā ā ā ā 46,924,170 Other invested assets ā ā ā ā ā ā ā ā 40,813,176 ā ā 40,813,176 Federal Home Loan Bank (FHLB) stock ā ā ā ā ā ā ā ā 500,000 ā ā 500,000 Preferred stock ā ā ā ā ā ā ā ā 4,728,375 ā ā 4,728,375 Notes receivable ā ā ā ā ā 5,810,328 ā ā ā ā ā 5,810,328 Policy loans ā ā ā ā ā ā ā ā 51,529 ā ā 51,529 Total Investments ā $ ā ā $ 493,769,307 ā $ 340,713,994 ā $ 834,483,301 Financial liabilities ā ā ā ā ā ā ā ā ā ā ā ā Embedded derivative for equity-indexed contracts ā $ ā ā $ ā ā $ 100,561,244 ā ā 100,561,244 ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2020 ā ā ā ā ā Fixed maturity securities: ā ā ā ā U.S. government obligations ā $ ā ā $ 6,164,983 ā $ ā ā $ 6,164,983 Mortgage-backed securities ā ā ā ā ā 14,757,414 ā ā ā ā ā 14,757,414 Collateralized loan obligations ā ā ā ā ā 221,773,609 ā ā ā ā ā 221,773,609 States and political subdivisions ā general obligations ā ā ā 117,330 ā ā ā 117,330 States and political subdivisions ā special revenue ā ā ā 6,202,204 ā ā ā 6,202,204 Trust preferred ā ā ā ā ā 2,284,816 ā ā ā ā ā 2,284,816 Corporate ā ā ā 18,608,995 ā 107,254,007 ā 125,863,002 Total fixed maturity securities ā ā ā ā ā 269,909,351 ā ā 107,254,007 ā ā 377,163,358 Mortgage loans on real estate, held for investment ā ā ā ā ā ā ā ā 94,989,970 ā ā 94,989,970 Derivatives ā ā ā ā ā 11,361,034 ā ā ā ā ā 11,361,034 Other invested assets ā ā ā ā ā ā ā ā 21,897,130 ā ā 21,897,130 Investment escrow ā ā ā ā ā 3,174,047 ā ā ā ā ā 3,174,047 Preferred stock ā ā ā ā ā ā ā ā 3,897,980 ā ā 3,897,980 Notes receivable ā ā ā ā ā 5,665,487 ā ā ā ā ā 5,665,487 Policy loans ā ā ā ā ā ā ā ā 45,573 ā ā 45,573 Total Investments ā $ ā ā $ 290,109,919 ā $ 228,084,660 ā $ 518,194,579 Financial liabilities ā ā ā ā ā ā ā ā ā ā ā ā Embedded derivative for equity-indexed contracts ā $ ā ā $ ā ā $ 84,501,492 ā ā 84,501,492 ā There were no transfers of financial instruments between any levels Accounting standards require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis are discussed above. There were no financial assets or financial liabilities measured at fair value on a non-recurring basis. The following disclosure contains the carrying values, estimated fair values and their corresponding placement in the fair value hierarchy for financial assets and financial liabilities as of June 30, 2021 and December 31, 2020, respectively: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā ā ā ā ā Fair Value Measurements Using ā ā ā ā ā Quoted Prices in ā ā ā ā ā ā ā ā ā ā ā ā ā ā Active Markets ā Significant Other ā Significant ā ā ā ā ā ā ā ā for Identical Assets ā Observable ā Unobservable ā ā ā ā ā Carrying ā and Liabilities ā Inputs ā Inputs ā Fair ā Amount (Level 1) (Level 2) (Level 3) Value Assets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Policy loans ā $ 51,529 ā $ ā ā $ ā ā $ 51,529 ā $ 51,529 Cash and cash equivalents ā 70,278,979 ā 61,217,719 ā 9,061,260 ā ā ā 70,278,979 Liabilities: ā ā ā ā ā Policyholder deposits (Deposit-type contracts) ā 848,714,996 ā ā ā ā ā 848,714,996 ā 848,714,996 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2020 ā ā ā ā ā Fair Value Measurements Using ā ā ā ā ā Quoted Prices in ā ā ā ā ā ā ā ā ā ā ā ā ā ā Active Markets ā Significant Other ā Significant ā ā ā ā ā ā ā ā for Identical Assets ā Observable ā Unobservable ā ā ā ā ā Carrying ā and Liabilities ā Inputs ā Inputs ā Fair ā Amount (Level 1) (Level 2) (Level 3) Value Assets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Policy loans ā $ 45,573 ā $ ā ā $ ā ā $ 45,573 ā $ 45,573 Cash and cash equivalents ā 151,679,274 ā 100,566,580 ā 51,112,694 ā ā ā 151,679,274 Liabilities: ā ā ā ā ā Policyholder deposits (Deposit-type contracts) ā 597,868,472 ā ā ā ā ā 597,868,472 ā 597,868,472 ā The following tables present a reconciliation of the beginning balance for all investments measured at fair value on a recurring basis using level three inputs during the six months ended June 30, 2021: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā As of ā ā ā ā ā ā ā As of ā ā December 31, ā ā ā ā ā ā ā ā June 30, ā 2020 Additions Sales 2021 Assets ā ā ā ā Fixed maturities ā $ 107,254,007 ā $ 103,910,243 ā $ 46,915,404 ā ā 164,248,846 Mortgage loans on real estate, ā ā ā ā ā ā ā ā ā ā ā ā held for investment ā ā 94,989,970 ā ā 51,978,684 ā ā 16,596,586 ā ā 130,372,068 Federal Home Loan Bank (FHLB) stock ā ā ā ā ā 500,000 ā ā ā ā ā 500,000 Other invested assets ā ā 21,897,130 ā ā 35,831,450 ā ā 16,915,404 ā ā 40,813,176 Preferred stock ā ā 3,897,980 ā ā 830,395 ā ā ā ā ā 4,728,375 Total Investments ā $ 228,039,087 ā $ 193,050,772 ā $ 80,427,394 ā $ 340,662,465 ā ā The following tables present a reconciliation of the beginning balance for all investments measured at fair value on a recurring basis using level three inputs during the year ended December 31, 2020: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā As of ā ā ā ā ā ā ā ā ā ā ā ā As of ā ā December 31, ā ā ā ā ā ā ā ā Valuation ā ā ā ā December 31, ā 2019 Additions Sales ā Allowance ā Impairment ā 2020 Assets ā ā ā ā ā ā ā ā ā Fixed maturities ā $ ā ā $ 107,254,007 ā $ ā ā $ ā ā $ ā ā $ 107,254,007 Mortgage loans on real ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā estate, held for investment ā ā 13,810,041 ā ā 99,356,435 ā ā 18,176,506 ā ā ā ā ā ā ā ā 94,989,970 Other invested assets ā ā 2,468,947 ā ā 74,722,714 ā ā 54,517,558 ā ā (776,973) ā ā ā ā ā 21,897,130 Preferred stock ā ā 500,000 ā ā 3,897,980 ā ā ā ā ā ā ā ā (500,000) ā ā 3,897,980 Total Investments ā $ 16,778,988 ā $ 285,231,136 ā $ 72,694,064 ā $ (776,973) ā $ (500,000) ā $ 228,039,087 ā Significant Unobservable Inputs āSignificant unobservable inputs occur when we could not obtain or corroborate the quantitative detail of the inputs. This applies to fixed maturity securities, preferred stock, mortgage loans and certain derivatives, as well as embedded derivatives in liabilities. Additional significant unobservable inputs are described below. ā Interest sensitive contract liabilities ā embedded derivative ā Significant unobservable inputs we use in the fixed indexed annuities embedded derivative of the interest sensitive contract liabilities valuation include: ā 1) Nonperformance risk ā For contracts we issue, we use the credit spread, relative to the US Department of the Treasury (Treasury) curve based on our public credit rating as of the valuation date. This represents our credit risk for use in the estimate of the fair value of embedded derivatives. ā 2) Option budget ā We assume future hedge costs in the derivativeās fair value estimate. The level of option budgets determines the future costs of the options and impacts future policyholder account value growth. ā 3) Policyholder behavior ā We regularly review the lapse and withdrawal assumptions (surrender rate). These are based on our initial pricing assumptions updated for actual experience. Actual experience may be limited for recently issued products. ā The following summarizes the unobservable inputs for available for sale and trading securities and the embedded derivatives of fixed indexed annuities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 (In millions, except for percentages) ā Fair value ā Valuation technique ā Unobservable inputs ā Minimum ā Maximum ā Weighted average* ā Impact of an increase in the input on fair value Interest sensitive contract liabilities - fixed indexed annuities embedded derivatives ā $100.6 ā Option Budget Method ā Nonperformance risk ā 0.2% ā 1.1% ā 0.6% ā Decrease ā ā ā ā ā ā Option budget ā 1.1% ā 3.4% ā 2.4% ā Increase ā ā ā ā ā ā Surrender rate ā 0.5% ā 15% (base) ā 7.4% ā Decrease * Weighted by account value ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2020 (In millions, except for percentages) ā Fair value ā Valuation technique ā Unobservable inputs ā Minimum ā Maximum ā Weighted average* ā Impact of an increase in the input on fair value Interest sensitive contract liabilities - fixed indexed annuities embedded derivatives ā $84.5 ā Option Budget Method ā Nonperformance risk ā 0.3% ā 1.3% ā 0.7% ā Decrease ā ā ā ā ā ā Option budget ā 2.6% ā 3.4% ā 2.7% ā Increase ā ā ā ā ā ā Surrender rate ā 0.5% ā 15% (base) ā 7.6% ā Decrease * Weighted by account value ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 7. Earnings Per Share The par value per each Company share is $0.001 with 20,000,000 voting common shares authorized, 2,000,000 non-voting common shares authorized, and 2,000,000 preferred shares authorized. With the infusion of capital in our December 2020 public offering of voting common stock and the issuance of voting common stock in in the offering, there were 3,737,564 voting common shares issued and outstanding as of June 30, 2021 and December 31, 2020. (Loss) earnings per basic share attributable to the Companyās voting common stock was computed based on the weighted average number of shares outstanding during each period. The weighted average number of shares outstanding shares outstanding (Loss) earnings per non-diluted share attributable to the Companyās voting common stock was computed based on the average shares outstanding and options granted under our 2020 and 2019 Long-Term Incentive Plans (āLTIPsā), as if all were vested and exercised. The weighted average number of non-diluted shares outstanding during the three months ended June 30, 2021 and 2020 were 3,776,169 and 2,542,482, respectively. The weighted average number of diluted shares outstanding during the six months ended June 30, 2021 and 2020 were 3,776,169 and 2,293,523, respectively. |
Income Tax Matters
Income Tax Matters | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Tax Matters | ā ā Note 8. Income Tax Matters Significant components of the Companyās deferred tax assets and liabilities as of June 30, 2021 and December 31, 2020 were as follows: ā ā ā ā ā ā ā ā ā June 30, 2021 December 31, 2020 Deferred tax assets: ā ā Loss carryforwards ā $ 1,741,665 ā $ 1,556,855 Capitalized costs ā 150,587 ā 174,364 Stock option granted ā ā 385,879 ā ā 14,270 Unrealized losses on investments ā 1,020,949 ā 1,534,332 Policy acquisition costs ā ā 2,637,502 ā ā 2,243,267 Charitable contribution carryforward ā ā 2,490 ā ā 2,490 Sec 163(j) limitation ā ā 153,809 ā ā 153,809 Benefit reserves ā 5,769,577 ā 3,568,914 Total deferred tax assets ā 11,862,458 ā 9,248,301 Less valuation allowance ā (9,934,913) ā (7,001,687) Total deferred tax assets, net of valuation allowance ā 1,927,545 ā 2,246,614 Deferred tax liabilities: ā ā Unrealized losses on investments ā 1,665,273 ā 1,994,232 Due premiums ā 81,789 ā 81,789 Intangible assets ā 147,000 ā 147,000 Bond Discount ā ā 29,327 ā ā 20,556 Property and equipment ā 4,156 ā 3,037 Total deferred tax liabilities ā 1,927,545 ā 2,246,614 Net deferred tax assets ā $ ā ā $ ā ā As of June 30, 2021 and December 31, 2020, the Company recorded valuation allowances of $9,934,913 and $7,001,687, respectively, on the deferred tax assets to reduce the total to an amount that management believes will ultimately be realized. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. There was income tax expense for the three months ended June 30, 2021 and 2020 of $746,689 and $479,513, respectively, and income tax expense for the six months ended June 30, 2021 and 2020 of $2.2 million and $887,429, respectively. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% to pretax income, as a result of the following: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, ā 2021 2020 2021 2020 Computed expected income tax benefit ā $ (891,741) ā $ (3,372,144) ā $ (927,045) ā $ 1,238,695 Increase (reduction) in income taxes resulting from: ā ā ā ā ā ā IMR and reinsurance ā ā 107,961 ā ā ā ā ā 175,006 ā ā ā Nondeductible expenses ā ā 1,549 ā ā 319 ā ā 3,003 ā ā 2,930 Change in valuation allowance ā 1,531,497 ā 4,169,372 ā 2,933,227 ā ā 21,682 Dividends received deduction ā ā (2,577) ā ā ā ā ā (5,154) ā ā ā Other ā ā ā ā ā (318,034) ā ā ā ā ā (375,878) Subtotal of increases ā 1,638,430 ā 3,851,657 ā 3,106,082 ā (351,266) Tax expense ā $ 746,689 ā $ 479,513 ā $ 2,179,037 ā $ 887,429 ā ā Section 382 of the Internal Revenue Code limits the utilization of U.S. net operating loss (āNOLā) carryforwards following a change of control, which occurred on June 28, 2018. As of June 30, 2021, the deferred tax assets included the expected tax benefit attributable to federal NOLs of $8,293,641. The federal NOLs generated prior to June 28, 2018 which are subject to Section 382 limitation can be carried forward. If not utilized, the NOLs of $1,089,366 prior to 2017 will expire through the year of 2032. The CARES Act of 2020 temporarily removed the NOL limitations enacted under the Tax Cuts and Jobs Act of 2017 on tax years ended December 31, 2018 through December 31, 2020. Therefore, NOLs generated from June 28, 2018 to December 31, 2020 do not expire and will carry forward indefinitely. NOLs generated after December 31, 2020 also do not expire and can be carried forward indefinitely but their utilization in any carry forward year is limited to 80% of taxable income in that year. The Company believes that it is more likely than not that the benefit from federal NOL carryforwards will not be realized; thus, we have recorded a full valuation allowance of $1,741,665 on the deferred tax assets related to these federal NOL carryforwards. Loss carry forwards for tax purposes as of June 30, 2021, have expiration dates that range from 2024 2040 |
Reinsurance
Reinsurance | 6 Months Ended |
Jun. 30, 2021 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Note 9. Reinsurance A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and, 2020, respectively, are as follows: ā ā ā ā ā ā ā ā ā June 30, 2021 December 31, 2020 Assets: ā ā Reinsurance recoverables ā $ 45,237,046 ā $ 32,146,042 Liabilities: ā ā ā ā ā ā Deposit-type contracts ā ā ā ā ā ā Direct ā $ 848,714,996 ā ā 597,868,472 Reinsurance ceded ā ā (539,987,972) ā ā (405,981,150) Retained deposit-type contracts ā $ 308,727,024 ā $ 191,887,322 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, ā 2021 2020 ā 2021 2020 ā ā ā ā ā ā Premiums ā ā ā ā ā ā ā ā ā ā ā ā Direct ā $ 53,397 ā $ 221,435 ā $ 101,484 ā $ 453,108 Reinsurance ceded ā ā (53,397) ā ā (221,435) ā ā (101,484) ā ā (453,108) Total Premiums ā $ ā ā $ ā ā $ ā ā $ ā Future policy and other policy benefits ā ā ā ā ā ā ā ā ā ā ā ā Direct ā ā 14,592 ā ā 18,405 ā $ 21,448 ā 52,799 Reinsurance ceded ā (14,592) ā (18,405) ā (21,448) ā (52,799) Total future policy and other policy benefits ā $ ā ā $ ā ā $ ā ā $ ā ā The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by third-party reinsurers except for a reinsurance with Unified as it was accounted for as discontinued operations as of June 30, 2021: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Recoverable/ ā ā ā ā Total Amount ā ā ā ā ā Recoverable ā Recoverable ā (Payable) on Benefit ā Ceded ā Recoverable/ ā ā AM Best ā on Paid ā on Unpaid ā Reserves/Deposit- ā Due ā (Payable) to/from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Ironbound Reinsurance Company Limited ā ā NR ā $ ā ā $ ā ā $ (1,606,577) ā $ ā ā $ (1,606,577) Optimum Re Insurance Company ā A ā ā ā ā ā ā ā ā 555,636 ā ā ā ā ā 555,636 Sagicor Life Insurance Company ā A- ā ā ā 148,662 ā 10,871,729 ā 290,669 ā 10,729,722 SDA Annuity & Life Re ā ā NR ā ā ā ā ā ā ā ā 4,331,106 ā ā ā ā ā 4,331,106 Crestline SP1 ā ā NR ā ā ā ā ā ā ā ā 17,495,505 ā ā ā ā ā 17,495,505 American Republic Insurance Company ā ā NR ā ā ā ā ā ā ā ā 5,994,880 ā ā ā ā ā 5,994,880 US Alliance Life and Security Company ā NR ā ā ā ā ā 7,779,414 ā 42,640 ā 7,736,774 ā ā ā ā ā $ ā ā $ 148,662 ā $ 45,421,693 ā $ 333,309 ā $ 45,237,046 ā ā The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by reinsurer except for Unified as it is accounted for as discontinued operations as of December 31, 2020: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Recoverable on ā ā ā ā Total Amount ā ā ā ā ā Recoverable ā Recoverable ā Benefit ā Ceded ā Recoverable ā ā AM Best ā on Paid ā on Unpaid ā Reserves/Deposit- ā Due ā from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Optimum Re Insurance Company ā A ā $ ā ā $ ā ā $ 524,734 ā $ ā ā $ 524,734 Sagicor Life Insurance Company ā A- ā ā ā 141,107 ā 11,285,364 ā 276,596 ā 11,149,875 SDA Annuity & Life Re ā ā NR ā ā ā ā ā ā ā ā 3,540,697 ā ā ā ā ā 3,540,697 Crestline SP1 ā ā NR ā ā ā ā ā ā ā ā 9,695,427 ā ā ā ā ā 9,695,427 US Alliance Life and Security Company ā NR ā ā ā ā ā 7,264,229 ā 28,920 ā 7,235,309 ā ā ā ā ā $ ā ā $ 141,107 ā $ 32,310,451 ā $ 305,516 ā $ 32,146,042 ā Our securities positions resulted in changes in the unrealized gains position as of June 30, 2021 compared to December 31, 2020, reported in Accumulated other comprehensive income on the Consolidated Balance Sheets. As discussed in Note 1, American Life has treaties with several third-party reinsurers that have FW and Modco provisions. Under those provisions, the assets backing the treaties are maintained by American Life as collateral but the assets and total returns or losses on the asset portfolios belong to the third-party reinsurers. Under GAAP this arrangement is considered an embedded derivative as discussed in Note 5. The assets had unrealized gains of approximately $3.3 million and $2.9 million as of June 30, 2021 and December 31, 2020, respectively. The terms of the contracts with the third-party reinsurers provide that unrealized gains on the portfolios accrue to the third-party reinsurers. Accordingly, the unrealized gains on the assets held by American Life were offset by a loss in the embedded derivative of $440,000 and $2.9 million, respectively. We account for this gain pass through by recording equivalent realized losses on our Consolidated Statements of Comprehensive (Loss) Income. Effective November 7, 2019, American Life entered into a Funds Withheld Coinsurance and Modified Coinsurance Agreement (āFW/Modco SDA Agreementā) with SDA Annuity & Life Re (āSDAā), a Cayman Islands-domiciled reinsurance company. Under the FW/Modco SDA Agreement, American Life cedes to SDA, on a FW and Modco basis, 5% quota share of certain liabilities with respect to its multi-year guaranteed annuity MYGA business and an initial 95% quota share of certain liabilities with respect to its FIA through December 31, 2020 and 30% through June 30, 2021. American Life has established two accounts to hold the assets for the FW/Modco Agreement, a Funds Withheld Account and a Modco Deposit Account. In addition, a trust account was established on November 7, 2019 among American Life, SDA and Wells Fargo Bank, National Association for the sole benefit of American Life to fund the SDA Funds Withheld Account and the SDA Modco deposit account for any shortage in required reserves. The initial settlement included net premium income of $3,970,509 and net statutory reserves of $3,986,411. The initial settlement for the funds withheld account was $2,256,802 and for the Modco deposit was $1,504,535 and the reserves required was $2,391,847 and $1,594,564, respectively. The amount owed to the FW account and the Modified coinsurance deposit account from the trust account was $135,044 and $90,029, respectively which was funded at the closing of the SDA transaction. Effective August 25, 2020 Effective April 15, 2020, American Life entered into a Funds Withheld and Funds Paid Coinsurance Agreement (āUS Alliance Agreementā) with US Alliance Life and Security Company, a Kansas reinsurance company (āUS Allianceā). Under the US Alliance Agreement, American Life will cede to US Alliance, on a funds withheld and funds paid coinsurance basis, an initial 49% quota share of certain liabilities with respect to American Lifeās FIA business effective January 1, 2020 through March 31, 2020. Effective from March 1, 2020 through March 10, 2020, American Life ceded a 45.5% quota share of certain liabilities with respect to its MYGA business to US Alliance. Effective March 11, 2020 through March 31, 2020, on a funds withheld and funds paid coinsurance basis, the quota share increased to 66.5% of certain liabilities with respect to its MYGA business. Effective April 1, 2020, the FIA quota share was reduced to 40% and the MYGA quota share was reduced to 25%. American Life has established a US Alliance Funds Withheld Account to hold the assets for the US Alliance Agreement. In addition, a trust account was established among American Life, US Alliance and Capitol Federal Savings Bank, for the sole benefit of American Life to fund the Funds Withheld Account for any shortage in required reserves. The initial settlement included net premium income of $13,542,325 and net statutory reserves of $14,706,862. The initial settlement for the Funds Withheld Account was $12,729,785 and to the trust account was $812,539 from American Life and $5,000,000 from US Alliance. Effective June 30, 2020, the FIA quota share was reduced to zero and effective July 1, 2020, the MYGA quota share was reduced to zero. Effective April 24, 2020, American life entered into a Master Letter Agreement with Seneca Re and Crestline Management regarding a flow of annuity reinsurance and related asset management, whereby Crestline Management agreed to provide reinsurance funding for a quota share percentage of 25% of the liabilities of American Life arising from the MYGA and a quota share percentage of 40% of the FIA products. This agreement expires on April 24, 2023. On July 24, 2020, the Nebraska Department of Insurance (āNDOIā) issued its non-disapproval of the Funds Withheld Coinsurance and Modified Coinsurance Agreement with Seneca Incorporated Cell, LLC 2020-02 (āSRC2ā) of Seneca Re, now known as Crestline RE SP1. The agreement closed on July 27, 2020. Under the agreement, American Life ceded to SRC2, on a Funds Withheld and Modified Coinsurance basis, an initial 25% quota share of certain liabilities with respect to American Lifeās MYGA business and 40% quota share of certain liabilities with respect to American Lifeās FIA business effective April 24, 2020. American Life has established a SRC2 Funds Withheld Account and a Modified Coinsurance Account to hold the assets pursuant to the agreement. The NDOI approved the inclusion of the SRC2 coinsurance in American Lifeās March 31, 2020 statutory financial statements. In addition, a trust account was established on July 23, 2020 among American Life, SRC2 and U.S. Bank, National Association for the sole benefit of American Life to fund the SRC2 Funds Withheld Account and the SRC2 Modco deposit account for any shortage in required reserves. Effective July 1, 2018, American Life entered into an assumptive and indemnity coinsurance transaction with Unified to transfer 100% of the risk related to the remaining legacy block of business; see Note 2 above for further discussion. We transferred $19,311,616 of GAAP net adjusted reserves as of July 1, 2018 to Unified for cash of $14,320,817, which was net of a ceding allowance of $3,500,000 plus the accrued interest on the transaction from July 1, 2018 until it closed on December 10, 2018. Unified assumed certain responsibilities for incurred claims, surrenders and commission from the effective date. The ceding commission of $3,500,000 was recorded net of the difference between statutory and GAAP net adjusted reserves, the elimination of DAC of $1,890,013, value of business acquired (āVOBAā) of $338,536, and the remaining deferred profit from our legacy business of $26,896. The remaining $3,069,690 was reflected as a deferred gain and will be recognized into income over the expected duration of the legacy blocks of business. As of June 30, 2021 and 2020, Unified had converted 90% and 89%, respectively, of the indemnity coinsurance to assumptive coinsurance. American Life had amortization income for the three months ended June 30, 2021 and 2020, of $12,348 and $211,436, respectively. American Life had amortization income for the six months ended June 30, 2021 and 2020, of $19,976 and $278,886, respectively. The ending deferred ceding commission as of June 30, 2021 and December 31, 2020 was $256,959 and $287,331, respectively. On June 26, 2021, the NDOI issued its non-disapproval of the Modified Coinsurance Agreement (āModco AEG Agreementā) with American Republic Insurance Company (āAEGā), an Iowa domiciled reinsurance company. The agreement closed on June 30, 2021. Under the Modco AEG Agreement, American Life cedes to AEG, on a modified coinsurance basis, 20% quota share of certain liabilities with respect to its multi-year guaranteed annuity MYGA-5 business and an initial 20% quota share of certain liabilities with respect to its fixed indexed annuity FIA. American Life has established a Modco Deposit Account to hold the assets for the Modco Agreement. The initial settlement included net premium income of $37.5 million and net statutory reserves of $34.8 million for the modified coinsurance account. The amount paid to the Modified coinsurance deposit account from AEG was $2.4 million. ā Under GAAP, ceding commissions are deferred on the Consolidated Balance Sheets and are amortized over the period of the policyholder contracts. The tables below shows the ceding commissions from the reinsurers excluding SRC1 and what was earned on a GAAP basis for the three and six months ended June 30, 2021 and 2020: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā ā 2021 ā 2020 Reinsurer ā Gross Ceding Commission ā Expense (1) ā Interest on Ceding Commission ā Earned ā Gross Ceding Commission ā Expense ā Interest on Ceding Commission ā Earned Ironbound Reinsurance Company Limited ā $ ā ā $ 14,383 ā $ 53,835 ā $ 122,807 ā $ 13,465 ā $ 5,464 ā $ 64,653 ā $ 93,086 SDA Annuity & Life Re ā ā ā ā ā 20,724 ā ā 21,659 ā ā 44,694 ā ā 569,747 ā ā 1,080,386 ā ā 16,001 ā ā 11,188 US Alliance Life and Security Company ā ā ā ā ā 17,439 ā ā 15,154 ā ā 54,055 ā ā 2,272,784 ā ā 4,009,102 ā ā 7,711 ā ā 10,465 Crestline Re SP 1 ā ā 2,032,041 ā ā 4,096,569 ā ā 60,562 ā ā 282,598 ā ā ā ā ā ā ā ā ā ā ā ā American Republic Insurance Company ā ā 2,222,882 ā ā 4,378,915 ā ā 12,222 ā ā 68,663 ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 4,254,923 ā $ 8,528,030 ā $ 163,432 ā $ 572,817 ā $ 2,855,996 ā $ 5,094,952 ā $ 88,365 ā $ 114,739 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Six months ended June 30, ā ā 2021 ā 2020 Reinsurer ā Gross Ceding Commission ā Expense (1) ā Interest on Ceding Commission ā Earned ā Gross Ceding Commission ā Expense ā Interest on Ceding Commission ā Earned Ironbound Reinsurance Company Limited ā $ ā ā $ 28,840 ā $ 108,280 ā $ 245,023 ā $ 688,110 ā $ 679,076 ā $ 110,022 ā $ 188,826 SDA Annuity & Life Re ā ā ā ā ā 45,041 ā ā 43,371 ā ā 90,766 ā ā 868,729 ā ā 1,628,850 ā ā 29,527 ā ā 18,341 US Alliance Life and Security Company ā ā 2,178 ā ā 38,174 ā ā 30,493 ā ā 120,661 ā ā 2,272,784 ā ā 4,009,102 ā ā 7,711 ā ā 10,465 Crestline SP1 ā ā 4,377,176 ā ā 8,774,776 ā ā 110,417 ā ā 498,360 ā ā ā ā ā ā ā ā ā ā ā ā American Republic Insurance Company ā ā 2,222,882 ā ā 4,378,915 ā ā 12,222 ā ā 68,663 ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 6,602,236 ā $ 13,265,746 ā $ 304,783 ā $ 1,023,473 ā $ 3,829,623 ā $ 6,317,028 ā $ 147,260 ā $ 217,632 ā (1) Includes acquisition and administrative expenses, commission expense allowance and product development fees. ā The tables below shows the ceding commissions deferred on each reinsurance transaction on a GAAP basis: ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 Reinsurer Deferred Ceding Commission ā Deferred Ceding Commission US Alliance Life and Security Company (1) $ 167,154 ā $ 172,297 Unified Life Insurance Company (1) ā 256,959 ā ā 276,935 Ironbound Reinsurance Company Limited (2) ā ā 5,572,756 ā ā 5,642,095 SDA Annuity & Life Re (2) ā 2,660,401 ā ā 2,703,496 US Alliance Life and Security Company (2) ā ā 2,425,980 ā ā 2,472,559 American Republic Insurance Company (2) ā ā 2,381,002 ā ā ā Crestline SP1 (2) ā ā 11,408,621 ā ā 6,931,375 ā ā $ 24,872,873 ā $ 18,198,757 ā (1) These reinsurance transactions on our legacy life insurance business received gross ceding commissions on the effective dates of the transaction. The difference between the statutory net adjusted reserves and the GAAP adjusted reserves plus the elimination of DAC and value of business acquired related to these businesses reduces the gross ceding commission with the remaining deferred and amortized over the lifetime of the blocks of business. (2) These reinsurance transactions include the ceding commissions and expense allowances which are accounted for as described in (1). The use of reinsurance does not relieve American Life of its primary liability to pay the full amount of the insurance benefit in the event of the failure of a reinsurer to honor its contractual obligation for all blocks of business except what is included in the Unified transaction. The reinsurance agreement with Unified discharges American Lifeās responsibilities once all the policies have changed from indemnity to assumptive reinsurance. No reinsurer of business ceded by American Life has failed to pay policy claims (individually or in the aggregate) with respect to our ceded business. American Life monitors several factors that it considers relevant to satisfy itself as to the ongoing ability of a reinsurer to meet all obligations of the reinsurance agreements. These factors include the credit rating of the reinsurer, the financial strength of the reinsurer, significant changes or events of the reinsurer, and any other relevant factors. If American Life believes that any reinsurer would not be able to satisfy its obligations with American Life, separate contingency reserves may be established. As of June 30, 2021 and December 31, 2020, no contingency reserves had been established. American Life expects to reinsure substantially all of its new insurance policies with a variety of reinsurers in exchange for upfront ceding commissions, expense reimbursements and administrative fees. American Life may retain some business with the intent to reinsure some or all at a future date. Retained and Reinsurer Balance Sheets The tables below shows the retained and reinsurance condensed balance sheets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Retained ā Reinsurance ā Consolidated ā Retained ā Reinsurance ā Consolidated Assets ā ā ā ā ā ā ā ā ā ā ā ā ā ā Total investments ā $ 378,874,422 ā $ 455,608,879 ā $ 834,483,301 ā $ 185,367,430 ā $ 332,827,149 ā $ 518,194,579 Cash and cash equivalents ā ā 30,530,673 ā ā 39,748,306 ā ā 70,278,979 ā ā 102,334,579 ā ā 49,344,695 ā ā 151,679,274 Accrued investment income ā ā 3,378,438 ā ā 7,070,431 ā ā 10,448,869 ā ā 1,955,938 ā ā 4,850,898 ā ā 6,806,836 Deferred acquisition costs, net ā ā 21,419,245 ā ā ā ā ā 21,419,245 ā ā 13,456,303 ā ā ā ā ā 13,456,303 Reinsurance recoverables (See Note 9) ā ā ā ā ā 45,237,046 ā ā 45,237,046 ā ā ā ā ā 32,146,042 ā ā 32,146,042 Other assets ā ā 4,143,746 ā ā 1,464,602 ā ā 5,608,348 ā ā 2,685,341 ā ā 1,432,384 ā ā 4,117,725 Total assets ā $ 438,346,524 ā $ 549,129,264 ā $ 987,475,788 ā $ 305,799,591 ā $ 420,601,168 ā $ 726,400,759 Liabilities and Stockholdersā Equity ā ā ā ā ā ā ā ā ā ā ā ā Liabilities: ā ā ā ā ā ā ā ā ā ā ā ā Policyholder liabilities ā $ 308,727,024 ā $ 552,624,529 ā $ 861,351,553 ā $ 191,887,322 ā $ 418,921,167 ā $ 610,808,489 Deferred gain on coinsurance transactions ā ā 24,872,873 ā ā ā ā ā 24,872,873 ā ā 18,198,757 ā ā ā ā ā 18,198,757 Other liabilities ā ā 23,140,192 ā ā (3,495,265) ā ā 19,644,927 ā ā 9,384,013 ā ā 1,680,001 ā ā 11,064,014 Total liabilities ā $ 356,740,089 ā $ 549,129,264 ā $ 905,869,353 ā $ 219,470,092 ā $ 420,601,168 ā $ 640,071,260 Stockholdersā Equity: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Voting common stock ā ā 3,738 ā ā ā ā ā 3,738 ā ā 3,738 ā ā ā ā ā 3,738 Additional paid-in capital ā ā 135,057,484 ā ā ā ā ā 135,057,484 ā ā 133,417,272 ā ā ā ā ā 133,417,272 Accumulated deficit ā ā (60,115,614) ā ā ā ā ā (60,115,614) ā ā (53,522,078) ā ā ā ā ā (53,522,078) Accumulated other comprehensive income ā ā 6,660,827 ā ā ā ā ā 6,660,827 ā ā 6,430,567 ā ā ā ā ā 6,430,567 Total Midwest Holding Inc.'s stockholders' equity ā $ 81,606,435 ā $ ā ā $ 81,606,435 ā $ 86,329,499 ā $ ā ā $ 86,329,499 Total liabilities and stockholders' equity ā $ 438,346,524 ā $ 549,129,264 ā $ 987,475,788 ā $ 305,799,591 ā $ 420,601,168 ā $ 726,400,759 ā |
Long-Term Incentive Plan
Long-Term Incentive Plan | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Long-Term Incentive Plan | Note 10. Long-Term Incentive Plans 2019 Plan ā On June 11, 2019, our Board of Directors approved the Midwest Holding Inc. Long-Term Incentive Plan (the ā2019 Planā) that reserves up to 102,000 shares of our voting common stock for award issuances. It provides for the grant of options, restricted stock awards, restricted stock units, stock appreciation rights, performance units, performance bonuses, stock awards and other incentive awards to eligible employees, consultants and eligible directors, subject to the conditions set forth in the 2019 Plan. Shareholder approval of the plan occurred on June 11, 2019. All awards are required to be established, approved, and/or granted by the compensation committee of our Board. ā On July 19, 2019, we granted stock options for 17,900 shares of voting common stock under the 2019 Plan that are exercisable during a ten-year period after the date of grant at a price of $25.00 per share, with one 17, 2021 and two ā On July 21, 2020, we granted stock options for 26,300 shares of voting common stock. Using the Black Scholes Model we determined the compensation expense was $334,950 over the vesting term of the stock options. The factors we used to determine the expense were: the weighted average fair market value at grant date of $14.50 per share, the exercise price of per share, the time to maturity of 10 years, an annual risk-free interest rate of .55% based upon the 10-year U.S. Treasury rate at grant date and a 60% volatility based on a valuation by an outside evaluator relating to the grants of these options. ā On September 15, 2020, we granted stock options for 6,667 shares of voting common stock at an exercise price of $41.25 per share. Using the Black Scholes Model we determined the compensation expense was $144,014 over the vesting term of the stock options. The factors we used to determine the expense were: the weighted average fair market value at grant date of $21.60 per share, the exercise price of $41.25 per share, the time to maturity of 10 years, an annual risk-free interest rate of .69% based upon the 10-year U.S. Treasury rate at grant date and a 66.2% volatility based on a valuation by an outside evaluator relating to the grants of these options. ā On November 16, 2020, we granted stock options for 35,058 shares of voting common stock at an exercise price of $41.25 per share. Using the Black Scholes Model we determined the compensation expense was $1,032,458 over the vesting term of the stock options. The factors we used to determine the expense were: the weighted average fair market value at grant date of $29.45 per share, the exercise price of $41.25 per share, the time to maturity of 10 years, an annual risk-free interest rate of .91% based upon the 10-year U.S. Treasury rate at grant date and a 66.3% volatility based on a valuation by an outside evaluator relating to the grant of these options. ā Also, on November 16, 2020 we granted an award of restricted stock for 18,597 shares of voting common stock to an officer. Using the Black Scholes Model we determined the compensation expense was $547,682 over the vesting term of the restricted stock award. The factors we used to determine the expense were: the weighted average fair market value at grant date of $29.45 per share, the exercise price of $41.25 per share, an annual risk-free interest rate of .91% based upon the 10-year U.S. Treasury rate at grant date and a 66.3% volatility based on a valuation by an outside evaluator relating to this restricted stock grant. ā 2020 Plan ā On November 16, 2020, our Board of Directors adopted a new equity incentive plan titled the 2020 Long-Term Incentive Plan (the "2020 Plan") that reserves up to 350,000 shares of voting common stock for award issuances. The terms of the 2020 Plan are essentially the same as the 2019 Plan. On June 29, 2021, the 2020 Plan was approved by the shareholders. ā In connection with the adoption of the 2020 Plan and the employment agreements with A. Michael Salem and Michael Minnich, our Co-Chief Executive Officers, we granted each of Messrs. Salem and Minnich stock options for 74,751 shares of our voting common stock plus additional stock options of 18,500 to other employees, with an exercise price of $41.25 per share exercisable in one ā On March 11, 2021, we granted stock options for 6,500 shares of voting common stock at an exercise price of $55.02 per share. Using the Black Scholes Model we determined the compensation expense was $320,938 over the vesting term of the stock options. The factors we used to determine the expense were: the weighted average fair market value at grant date of $49.38 per share, the exercise price of $55.02 per share, the time to maturity of 10 years, an annual risk-free interest rate of 1.54% based upon the 10-year U.S. Treasury rate at grant date and a 65.7% volatility based on a valuation by an outside evaluator relating to the grant of these options. On January 16, 2021 and May 1, 2020, stock options for 4,650 and 200 shares with a fair market value of $29.45 and $8.00 per share, respectively, became vested on the restricted stock and in connection with the resignation of two Board members. As of June 30, 2021 and December 31, 2020, the outstanding non-vested stock under the 2019 and 2020 Plans was 259,124 and 100,972, respectively with 11,700 and 3,350 shares being forfeited during the six months ended June 30, 2021 and December 31, 2020, respectively. ā For the three months ended June 30, 2021 and 2020, we amortized the compensation expense related to the 2019 and 2020 Plans, from the stock grants on the dates above, over the vesting tranches which resulted in expenses in additional paid in capital of $1.5 million and $25,022, respectively and for the six months ended June 30, 2021 and 2020, we amortized the compensation expense related to the 2019 and 2020 Plans, from the stock grants on the dates above, over the vesting tranches as an expense and an increase in additional paid in capital of $1.8 million and $25,022, respectively. The table below shows the remaining non-vested shares under the 2019 and 2020 Plans: ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā Stock Options/ (1) ā Stock Options (1) Beginning balance ā 100,972 ā 17,900 Options granted under the 2019 Plan ā ā ā 68,025 Options granted under the 2020 Plan ā 174,502 ā ā Restricted stock granted under the 2019 Plan ā ā ā 18,597 Forfeited ā (11,700) ā (3,350) Vested ā (4,650) ā (200) Ending Balance 259,124 ā 100,972 ā (1) Reflects reverse stock split of 500 :1 as of August 27, 2020. |
Deposit-Type Contracts
Deposit-Type Contracts | 6 Months Ended |
Jun. 30, 2021 | |
Separate Accounts Disclosure [Abstract] | |
Deposit-Type Contracts | Note 11. Deposit-Type Contracts The Companyās deposit-type contracts represent the contract value that has accrued to the benefit of policyholders as of the balance sheet date. Liabilities for these deposit-type contracts are included without reduction for potential surrender charges. This liability is equal to the accumulated account deposits, plus interest credited, and less policyholder withdrawals. The following table provides information about deposit-type contracts as of June 30, 2021 and the year ended December 31, 2020: ā ā ā ā ā ā ā ā ā June 30, 2021 December 31, 2020 Beginning balance ā $ 597,868,472 ā $ 171,168,785 US Alliance ā 779,257 ā (3,307,587) Ironbound Reinsurance Company Limited ā 3,110,313 ā 6,080,196 SDA Annuity & Life Re (includes MVA adjustment and embedded derivative) ā ā 1,219,703 ā ā 3,053,160 Crestline SP1 ā ā 703,681 ā ā 3,606,833 American Republic Insurance Company ā ā 239,223 ā ā ā Deposits received ā 249,519,268 ā 415,561,302 Investment earnings (includes embedded derivative) ā 1,584,814 ā 4,214,828 Withdrawals ā (6,309,735) ā (2,509,045) Ending balance ā $ 848,714,996 ā $ 597,868,472 ā |
Contingencies and Commitments
Contingencies and Commitments | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Commitments | Note 12. Contingencies and Commitments Legal Proceedings: Regulatory Matters: 2019. American Life received a Certificate of Authority to conduct business during 2020 from each of the following states and the District of Columbia: Utah, Montana, Louisiana and Ohio. American Life has pending applications in six additional states that are expected to be approved by the end of 2021. The NDOI granted American Life non-disapproval to enter into the Funds Withheld Coinsurance and Modified Coinsurance Agreement with Ironbound prior to closing of the agreement in July 2019. The NDOI granted American Life non-disapproval to enter into the Funds Withheld Coinsurance and Modified Coinsurance Agreement with SDA prior to closing of the agreement in December 2019. The NDOI granted American Life non-disapproval to enter into the Funds Withheld and Funds Paid Coinsurance Agreement with US Alliance prior to closing of the agreement on April 15, 2020. The NDOI granted American Life non-disapproval to enter into the Funds Withheld and Modified Coinsurance Agreement with Seneca Re through SRC1 prior to closing of the agreement on May 13, 2020. The NDOI granted American Life non-disapproval to enter into the FW and Modco Agreement with Seneca Re SRC2 prior to closing of the agreement on July 27, 2020. The NDOI granted American Life non-disapproval to enter into the Modco Agreement with AEG prior to closing of the agreement on June 30, 2021. ā |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | Note 13. Leases Our operating lease activities consist of leases for office space and equipment. Our finance lease activities consisted of one lease for hardware which we owned at the end of the lease agreement on March 31, 2020. None of our lease agreements include variable lease payments. Supplemental balance sheet information as of June 30, 2021 and December 31, 2020, are as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā As of ā As of Leases Classification June 30, 2021 December 31, 2020 Assets ā ā Operating Operating lease right-of-use assets ā $ 287,660 ā $ 348,198 ā ā ā ā ā ā ā ā ā Liabilities ā ā Operating lease Operating lease liabilities ā $ 331,350 ā $ 396,911 ā Our operating and finance leases expenses for the three and six months ended June 30, 2021 and 2020, were as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, Leases Classification 2021 2020 2021 2020 Operating General and administrative expense ā $ 383 ā $ 2,485 ā $ 1,616 ā $ 4,577 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Finance lease cost: ā ā ā ā ā Amortization expense ā ā ā ā ā ā ā 2,913 ā Interest expense ā ā ā ā ā ā ā 111 ā Minimum contractual obligations for our operating leases at June 30, 2021, are as follows: ā ā ā ā ā ā Operating Leases 2021 (excluding six months ended June 30, 2021) ā $ 81,766 2022 ā 156,608 2023 ā 161,674 2024 ā 13,508 Total remaining lease payments ā $ 413,556 ā Supplemental cash flow information related to leases was as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, ā 2021 2020 2021 2020 Cash payments ā ā ā ā Operating cash flows from operating leases ā $ (2,723) ā $ (190) ā $ (5,023) ā $ (1,035) Operating cash flows from finance leases ā ā ā 1,164 ā ā ā 4,657 Financing cash flows from finance leases ā ā ā ā ā ā ā (111) ā The weighted average remaining lease terms of our operating leases were approximately one year and one and a half years |
Statutory Net Income and Surplu
Statutory Net Income and Surplus | 6 Months Ended |
Jun. 30, 2021 | |
Statutory Net Income and Surplus [Abstract] | |
Statutory Net Income and Surplus | ā Note 14. Statutory Net Income and Surplus of American Life American Life is required to prepare statutory financial statements in accordance with statutory accounting practices prescribed or permitted by the NDOI. Statutory practices primarily differ from GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing investments and certain assets and accounting for deferred taxes on a different basis. As filed in the statutory-basis annual statement with the NDOI, American Lifeās statutory net gains for the six months June 30, 2021 and 2020 were $2,278,898 and $423,474, respectively. Capital and surplus of American Life as of June 30, 2021 and December 31, 2020 was $78,509,585 and $77,446,537, respectively. The net gains were primarily due to the ceding commission and reserve adjustments earned on the Ironbound, SDA, US Alliance, SRC1, and Crestline Re SP1 reinsurance transactions; offset by continuing expenses incurred to provide services on the new software and related technology to distribute products through national marketing organizations. For the six months ended June 30, 2021, the MYGA and FIA sales were $35.6 million and $214.0 million compared to the MYGA and FIA sales $59.0 million and $88.5 million as of June 30, 2020. An additional $5.2 million of MYGA and $26.9 million of FIA sales were pending as of June 30, 2021. State insurance laws require American Life to maintain certain minimum capital and surplus amounts on a statutory basis. Our insurance subsidiary is subject to regulations that restrict the payment of dividends from statutory surplus and may require prior approval from its domiciliary insurance regulatory authorities. American Life is also subject to risk-based capital (āRBCā) requirements that may further affect its ability to pay dividends. American Lifeās statutory capital and surplus as of June 30, 2021 and December 31, 2020 exceeded the amount of statutory capital and surplus necessary to satisfy regulatory requirements, including the RBC requirements as of those dates. As of December 31, 2020, American Life had an invested asset that was impaired as a result of the fair market of the underlying collateral being valued less that the book value. This was a non-admitted asset for statutory accounting purposes. This asset was held in our modified coinsurance account for Ironbound so it was passed through to the third-party reinsurer through as a reduction of the investment income earned by the third-party reinsurer. As of March 31, 2021, this invested asset was sold for a loss of $2.4 million that was passed through to the third-party reinsurer as a reduction of its investment income earned. As of June 30, 2021 and December 31, 2020, American Life did not hold any participating policyholder contracts where dividends were required to be paid. |
Third Party Administration
Third Party Administration | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Third Party Administration | Note 15. Third-Party Administration The Company commenced its third-party administrative (āTPAā) services in 2012 as an additional revenue source. These services are offered to non-affiliated entities. These agreements, for various levels of administrative services on behalf of each company, generate fee income for the Company. Services provided vary and can include some or all aspects of back-office accounting and policy administration. TPA fee income earned for TPA administration during the three months ended June 30, 2021 and 2020 were $107,500 and $396,061, respectively. TPA fee income earned for TPA administration during the six months ended June 30, 2021 and 2020 were $315,000 and $786,105, respectively. |
Reverse Stock Split
Reverse Stock Split | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Reverse Stock Split | Note 16. Reverse Stock Split On August 10, 2020, Midwest filed Articles of Amendment of Amended and Restated Articles of Incorporation (āAmendmentā) that changed the total number of shares that the Company is authorized to issue to 22,000,000 shares of common stock, of which 20,000,000 were designated as voting common stock with a par value of $0.001 per share and 2,000,000 designated as non-voting common stock with a par value of $0.001 per share. The Amendment also provides for 2,000,000 shares of preferred stock with a par value of $0.001 per share. The Amendment provided that each 500 shares of voting common stock either issued or outstanding would be converted into one share paid approximately $175,000 for those fractional shares and is now holding treasury stock represented by that amount. The effective date, August 27, 2020, for the reverse stock split was retrospectively applied to these financial statements. Outstanding shares of voting common stock as of June 30, 2021 and December 31, 2020, were 3,737,564. ā |
Capital Raise
Capital Raise | 6 Months Ended |
Jun. 30, 2021 | |
Capital Raise [Abstract] | |
Capital Raise | Note 17. Capital Raise On December 21, 2020, Midwest completed a public offering of 1,000,000 shares of its voting common stock offered at a price to the public at $70.00 per share. The Midwest voting common stock was concurrently approved for listing on the Nasdaq Capital Market under the ticker symbol āMDWT.ā ā Midwest raised $70,000,000 of gross proceeds from the public offering and incurred commissions and expenses of approximately $6,044,350 that were offset against those proceeds. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Equity | Note 18. Equity Preferred stock As of June 30, 2021 and December 31, 2020, the Company had 2,000,000 shares of preferred stock authorized but none were issued or outstanding. Common Stock ā Midwest holds approximately 4,500 shares of voting common stock in its treasury due to the reverse stock split discussed in Note 16 above. ā Additional paid-in capital ā Additional paid-in capital is primarily comprised of the cumulative excess cash received by the Company in conjunction with past issuances of its shares. It also is increased by the amortization expense of the consideration calculated at inception of the stock option grant as discussed in Note 10 ā Long-Term Incentive Plans above. ā ā Accumulated Other Comprehensive Income (AOCI) AOCI represents the cumulative Other Comprehensive Income (OCI) items that are reported separate from net (Loss) Income and detailed on the Consolidated Statements of Comprehensive (Loss) Income. AOCI includes the unrealized gains and losses on investments and DAC, net of offsets and taxes are as follows: ā ā ā ā ā ā ā ā ā ā ā Unrealized Unrealized Accumulated other Balance at December 31, 2019 $ 473,399 ā $ 146,185 ā $ 619,584 Other comprehensive income before Reclassifications 7,398,432 ā ā ā ā 7,398,432 Unrealized gains on foreign currency ā ā ā ā (146,185) ā ā (146,185) Less: Reclassification adjustments for losses realized in net income ā (1,441,264) ā ā ā ā ā (1,441,264) Balance at December 31, 2020 ā 6,430,567 ā ā ā ā ā 6,430,567 Other comprehensive income (loss) before reclassifications, net of tax ā 1,336,272 ā ā ā ā ā 1,336,272 Less: Reclassification adjustments for losses realized in net income, net of tax ā (1,106,012) ā ā ā ā ā (1,106,012) Balance at June 30, 2021 $ 6,660,827 ā $ ā ā $ 6,660,827 ā |
Deferred Acquisition Costs
Deferred Acquisition Costs | 6 Months Ended |
Jun. 30, 2021 | |
Deferred Acquisition Costs | |
Deferred Acquisition Costs | Note 19. Deferred Acquisition Costs The following table represents a rollforward of DAC, net of reinsurance: ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 Beginning balance ā $ 13,456,303 ā $ ā Additions ā ā 8,867,230 ā ā 13,919,206 Amortization ā ā (1,027,073) ā ā (670,233) Interest ā ā 187,926 ā ā 138,295 Impact of unrealized investment losses ā ā (65,141) ā ā 69,035 Ending Balance ā $ 21,419,245 ā $ 13,456,303 |
Nature of Operations and Basi_2
Nature of Operations and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Nature of operations | Nature of Operations Midwest Holding Inc. (āMidwest,ā āthe Company,ā āwe,ā āour,ā or āusā) was incorporated in Nebraska on October 31, 2003 for the primary purpose of operating a financial services company. The Company redomesticated from the State of Nebraska to the State of Delaware on August 27, 2020. The Company is in the life and annuity insurance business and operates through its wholly owned subsidiaries, American Life & Security Corp. (āAmerican Lifeā), and 1505 Capital LLC (ā1505 Capitalā) as well as through its sponsored captive reinsurance company, Seneca Reinsurance Company, LLC (āSeneca Reā). American Life is a Nebraska-domiciled life insurance company, which is also commercially domiciled in Texas, that is currently licensed to sell, underwrite, and market life insurance and annuity products in 21 states and the District of Columbia. Effective March 12, 2020, Seneca Reinsurance Company, LLC (āSeneca Reā), a Vermont limited liability company, was formed by Midwest to operate as a sponsored captive insurance company for the purpose of insuring and reinsuring various types of risks of its participants through one or more protected cells and to conduct any other business or activity that is permitted for sponsored captive insurance companies under Vermont insurance regulations. On March 30, 2020, Seneca Re received its Certification of Authority to transact the business of a captive insurance company. On May 12, 2020, Midwest contributed $300,000 to Seneca Re for a 100% ownership interest. On April 2, 2019, we obtained a 51% ownership in 1505 Capital, a Delaware limited liability company, that was established in 2018 to provide financial and investment advisory and management services to clients and related investment activities. On June 15, 2020, we purchased the remaining 49% ownership in 1505 Capital for $500,000. 1505 Capitalās financial results have been consolidated with the Companyās since the date of its acquisition. On July 27, 2020, American Life entered into a reinsurance agreement (the āReinsurance Agreementā) with a new protected cell formed by Seneca Re (Seneca Incorporated Cell, LLC 2020-02 (āSRC2ā)). SRC2 was capitalized by Crestline Management, L.P. (āCrestlineā), a significant shareholder of Midwest. The Reinsurance Agreement, which is effective as of April 24, 2020, was entered into pursuant to a Master Letter Agreement (the āMaster Agreementā) dated and effective as of April 24, 2020, among American Life, Seneca Re and Crestline. The Reinsurance Agreement supports American Lifeās new business production by providing reinsurance capacity for American Life to write certain kinds of fixed and multi-year guaranteed annuity products. Concurrently with the Reinsurance Agreement: ā ā American Life and the Reinsurer each entered into investment management agreements with Crestline, pursuant to which Crestline will manage the assets that support the reinsured business; and ā American Life and the Reinsurer entered into a trust agreement whereby the Reinsurer maintains for American Lifeās benefit a trust account that supports the reinsured business. ā In addition, pursuant to the Master Agreement, the parties thereto have agreed to enter into a separate agreement whereby, among other things and subject to certain conditions, American Life will agree to reinsure additional new business production to one or more reinsurers formed and/or capitalized by Crestline, Midwest or an appropriate affiliate will refer potential advisory clients to Crestline, and American Life will consider investing in certain assets originated or sourced by Crestline. ā On April 24, 2020, Midwest entered into a Securities Purchase Agreement with Crestline Assurance Holdings LLC, a Delaware limited liability company (āCrestline Assuranceā), Xenith, and Vespoint, and pursuant to the agreement, Crestline Assurance purchased 444,444 shares of the Companyās voting common stock, par value $0.001 per share (ācommon stockā), at a purchase price of $22.50 per share for $10.0 million. Under the agreement, the Company contributed $5.0 million to American Life. Also, effective as of April 24, 2020, in a separate transaction, Midwest sold 231,655 shares of common stock to various investors at $22.50 per share for $5.227 million. Also, effective April 24, 2020, American Life entered into a Master Letter Agreement with Seneca Re and Crestline Management regarding a flow of annuity reinsurance and related asset management, whereby Crestline Management agreed to provide reinsurance funding for a quota share percentage of 25% of the liabilities of American Life arising from its multi-year guaranteed annuities (āMYGAā) and a quota share percentage of 40% for American Lifeās fixed indexed annuity (āFIAā) products. This agreement expires on April 24, 2023. In December 2020, the Company completed a public offering of its common stock for gross proceeds of $70,000,000 (see Note 17). In connection therewith, the Company's common stock was approved for listing and began trading on the Nasdaq Capital Market (āNASDAQā) upon the closing of the public offering. Management evaluates the Company as one reporting segment in the life insurance industry. The Company is primarily engaged in the underwriting and marketing of annuity products and life insurance through American Life, and then reinsuring such products with third-party reinsurers, and since May 13, 2020, with Seneca Re protected cells. The Companyās historical product offerings consisted of a multi-benefit life insurance policy that combined cash value life insurance with a tax deferred annuity and a single premium term life product. These product offerings were underwritten, marketed, and managed as a group of similar products on an overall portfolio basis. American Life presently offers five products, two MYGA, a FIA, and two bonus plans associated with the FIA product. It is not presently offering any traditional life insurance products. |
Basis of presentation | Basis of Presentation These consolidated financial statements for the three and six months ended June 30, 2021 and 2020 and year ended December 31, 2020 have been prepared in conformity with generally accepted accounting principles in the United States of America (āGAAPā). All intercompany accounts and transactions have been eliminated in consolidation and certain immaterial reclassifications have been made to the prior period results to conform to the current periodās presentation with no impact on results of operations or total stockholdersā equity. The information contained in the āNotes to Consolidated Financial Statementsā included in the Companyās Annual Report on Form 10-K for the year ended December 31, 2020 (ā2020 Form 10-Kā), should be read in conjunction with the reading of these interim unaudited consolidated financial statements. ā The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2021. |
Investments | Investments All fixed maturities owned by the Company are considered available-for-sale and are included in the consolidated financial statements at their fair value as of the financial statement date. Premiums and discounts on fixed maturity debt instruments are amortized using the scientific-yield method over the term of the bonds. Realized gains and losses on securities sold during the year are determined using the specific identification method. Unrealized holding gains and losses, net of applicable income taxes, are included in accumulated other comprehensive income. Declines in the fair value of available-for-sale securities below their amortized cost are evaluated to assess whether any other-than-temporary impairment loss should be recorded. In determining if these losses are expected to be other-than-temporary, the Company considers severity of impairment, duration of impairment, forecasted recovery period, industry outlook, the financial condition of the issuer, issuer credit ratings, and the intent and ability of the Company to hold the investment until the recovery of the cost. The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If the Company intends to sell a security or it is more likely than not that the Company would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the statement of comprehensive income as an impairment. If the Company does not expect to recover the amortized basis, does not plan to sell the security, and if it is not more likely than not that the Company would be required to sell a security before the recovery of its amortized cost, the recognition of the impairment is bifurcated. The Company recognizes the credit loss portion as realized losses and the noncredit loss portion in accumulated other comprehensive loss. The credit component of other-than-temporary impairment is determined by comparing the net present value of projected cash flows with the amortized cost basis of the debt security. The net present value is calculated by discounting the Companyās best estimate of projected future cash flows at the effective interest rate implicit in the fixed income security at the date of acquisition. Cash flow estimates are driven by assumptions regarding probability of default, including changes in credit ratings, and estimates regarding timing and amount of recoveries associated with a default. The Company had no impairment to recognize as of June 30, 2021. As of December 31, 2020, the Company analyzed its securities portfolio and determined that an impairment of approximately $35,000 should be recorded for one debt security, an impairment of $500,000 was recognized on a preferred stock, and a valuation allowance of $776,973 established on one lease. The valuation allowance on the lease of $776,973 was released as of March 31, 2021 due to the sale of the investment. The remaining investments were not impaired as of December 31, 2020. Investment income consists of interest, dividends, gains and losses from equity method investments, and real estate income, which are recognized on an accrual basis along with the amortization of premiums and discounts. Certain available-for-sale investments are maintained as collateral under funds withheld (āFWā) and modified coinsurance (āModcoā) agreements but the assets and total returns or losses on the asset portfolios belong to the third-party reinsurers. American Life has treaties with several third-party reinsurers that have funds withheld and modified coinsurance provisions. In a Modco agreement, the ceding entity retains the assets equal to the modified coinsurance reserves retained. In a FW agreement, assets that would normally be paid over to a reinsurer are withheld by the ceding company to permit statutory credit for unauthorized reinsurers to reduce the potential credit risk. The unrealized gains/losses on those investments are passed through to the third-party reinsurers as either a realized gain or loss on the Consolidated Statements of Comprehensive (Loss) Income. |
Mortgage loans on real estate, held for investment | Mortgage loans on real estate, held for investment Mortgage loans on real estate held for investment are carried at unpaid principal balances. Interest income on mortgage loans on real estate, held for investment, is recognized in net investment income at the contract interest rate when earned. A mortgage loan is considered to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the mortgage agreement. Valuation allowances on mortgage loans are established based upon losses expected by management to be realized in connection with future dispositions or settlements of mortgage loans, including foreclosures. The Company establishes valuation allowances for estimated impairments on an individual loan basis as of the balance sheet date. Such valuation allowances are based on the excess carrying value of the loan over the present value of expected future cash flows discounted at the loanās original effective interest rate. These evaluations are revised as conditions change and new information becomes available. No such valuation allowance was established as of June 30, 2021 or as of December 31, 2020. |
Derivative Instruments | Derivative Instruments Derivatives are used to hedge the risks experienced in our ongoing operations, such as equity, interest rate, and cash flow risks, or for other risk management purposes, which primarily involve managing liability risks associated with our indexed annuity products and reinsurance agreements. Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, or other underlying notional amounts. Derivative assets and liabilities are carried at fair value on the Consolidated Balance Sheets. To qualify for hedge accounting, at the inception of the hedging relationship, we formally document our designation of the hedge as a cash flow or fair value hedge and our risk management objective and strategy for undertaking the hedging transaction. In this documentation, we identify how the hedging instrument is expected to hedge the designated risks related to the hedged item, the method to be used to retrospectively and prospectively assess the hedging instrumentās effectiveness and the method which would be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship. During the last quarter of 2020, the Company began investing in foreign currency futures to hedge the fluctuations in the foreign currency. The formal documentation and hedge effectiveness was not completed at the date we entered into those futures contracts; therefore, they do not qualify for hedge accounting. The futures fair market values were recorded on our Consolidated Statements of Comprehensive (Loss) Income as realized gains or (losses). Additionally, reinsurance agreements written on a FW or Modco basis contain embedded derivatives on our fixed indexed annuity product. Gains or (losses) associated with the performance of assets maintained in the Modco deposit and FW accounts are reflected as realized gains or (losses) in Consolidated Statements of Comprehensive (Loss) Income. |
Other invested assets | Other Invested Assets The Company purchases and sells equipment leases in its investment portfolio. Other invested assets also consists of approximately $13.2 million of various assets entered into by one of our investment managers. Of this total, about $11.0 million are non-registered private funds with underlying assets with characteristics of bonds. The remaining assets are student loan funding pools, joint ventures, other corporate assets, and private equity funds. Additionally, the Company entered into a fund investment on November 3, 2020 for $15.8 million with an additional $3.9 million invested on December 16, 2020. At December 31, 2020, we had a $19.7 million investment in the fund. Effective January 2021, this investment was repackaged into a special purpose vehicle between American Life and PF Collinwood Holdings, LLC (āPFCā) with American Life owning 100% of the entity. No gain or loss was recognized from the repackaging of PFC. The value of PFC as of June 30, 2021 was $16.9 million. |
Investment escrow | Investment escrow The Company held in escrow $0 and $3,174,047 as of June 30, 2021 and of December 31, 2020, respectively. The cash held at year end was used to settle other invested assets that closed in January 2021, respectively . |
Preferred Stock | Preferred Stock The Company impaired in full a preferred stock investment as of December 31, 2020. This was recorded as a reduction of the asset on the Consolidated Balance Sheets and a bad debt expense on the Consolidated Statements of Comprehensive (Loss) Income. In 2020 American Life entered into a series of transactions with Ascona Group Holdings Ltd (āAGHā). One of the transactions involved the acquisition of Pound Sterling (āGBPā) 3,642,090 of preferred equity in Ascona Group Holdings Limited (āthe Preferred Equityā) along with warrants bearing no initial assigned value (the āWarrantsā) as of September 28, 2020. American Life initially created a special purpose vehicle called Ascona Asset Holding LLC (āAAHā) to hold the Preferred Equity and Warrants, and later created Ascona Collinwood HoldCo LLC (āACHā) to be the sole member of AAH. American Life and Crestline Re SP1 own 74% and 26%, respectively, of ACH. We are carrying the preferred equity at a market value of $4.7 million as of June 30, 2021 and $3.9 million as of December 31, 2020. The warrants have no market value as of June 30, 2021 and December 31, 2020. |
Notes receivable | Notes receivable The Company held in notes receivable as of June 30, 2021 and December 31, 2020, a note of $5,810,328 and $5,665,487, respectively, between American Life and a related party. The note receivable is between American Life and Chelsea Holdings Midwest LLC with an interest rate of 5% per annum that was rated BBB+ by a nationally recognized statistical rating organization (āNRSROā). This note matures in 50 years on June 18, 2050. This note is being carried at the fair market value. |
Policy loans | Policy loans |
Cash and cash equivalents | Cash and cash equivalents The Company considers all liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of June 30, 2021 and December 31, 2020, the Company held approximately GBP 963,930 and GBP 505,349 in custody accounts, respectively. The USD equivalent held was approximately $1,170,660 and $690,787, respectively. As of June 30, 2021 and December 31, 2020, the Company held approximately EUR 620,750 and EUR 87,633, respectively. The USD equivalent held was approximately $736,000 and $107,000, respectively. As of June 30, 2021 and December 31, 2020, we had losses of approximately $65,000 and gains of approximately $45,000, respectively, related to the change in the foreign currency exchange rate of the GBP and EUR that were recorded in realized (losses) gains on investments in the Consolidated Statements of Comprehensive (Loss) Income. The Company had money market investments of approximately $42.8 million and $100.6 million at June 30, 2021 and December 31, 2020, respectively. |
Deferred acquisition costs | Deferred acquisition costs Deferred acquisition costs (āDACā) consist of incremental direct costs, net of amounts ceded to third-party reinsurers, that result directly from and are essential to the contract acquisition transaction and would not have been incurred by the Company had the contract acquisition not occurred. These costs are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. The Company evaluates the types of acquisition costs it capitalizes. The Company capitalizes agent compensation and benefits and other expenses that are directly related to the successful acquisition of contracts. The Company also capitalizes expenses directly related to activities performed by the Company, such as underwriting, policy issuance, and processing fees incurred in connection with successful contract acquisitions. Recoverability of DAC is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense. The Company performs a recoverability analysis annually in the fourth quarter of each calendar year unless events occur which require an immediate review. The Company determined that no events occurred in the six months ended June 30, 2021 that suggest a review should be undertaken. The Company performed a recoverability analysis during the fourth quarter of 2020 and determined that all DAC balances were recoverable as of December 31, 2020. |
Property and equipment | Property and equipment Property and equipment are stated at cost net of accumulated depreciation. Annual depreciation is primarily computed using straight-line methods for financial reporting and straight-line and accelerated methods for tax purposes. Furniture and equipment is depreciated over 3 During the first quarter of 2021, the Company started the implementation of a new cloud-based enterprise resource planning (āERPā) and enterprise performance management (āEPMā) system (āOracleā). The Company expects to capitalize an estimated $505,000 of consultation and support expenses from two vendors. The Company will begin amortizing these fees over a period of 5 years from the date of implementation. The useful life of the system has been estimated at 5 years in accordance with guidance in ASC 350, Intangibles ā Goodwill and Other Maintenance and repairs are expensed as incurred. Replacements and improvements which extend the useful life of the asset are capitalized. The net book value of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in earnings. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. Management has determined that no such events occurred in the six months ended June 30, 2021 that would indicate the carrying amounts may not be recoverable. |
Reinsurance | Reinsurance In the normal course of business, the Company seeks to limit any single exposure to losses on large risks by purchasing reinsurance. The amounts reported in the Consolidated Balance Sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. The Company generally strives to diversify its credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Companyās primary liability under the policies written. Therefore, the Company regularly evaluates the financial condition of its reinsurers including their activities with respect to claim settlement practices and commutations, and establishes allowances for uncollectible reinsurance recoverable as appropriate. There were no allowances established as of June 30, 2021 or December 31, 2020. We expect to reinsure substantially all of our new insurance policies with a variety of reinsurers in exchange for upfront ceding commissions, expense reimbursements and administrative fees. Under these reinsurance agreements, we expect there will be a monthly or quarterly settlement of premiums, claims, surrenders, collateral, and other administration fees. We believe this strategy will help preserve American Lifeās capital while supporting its growth because American Life will have lower capital requirements when its business is reinsured due to lower overall financial exposure versus retaining the insurance policy business itself. See Note 9 below for further discussion of our reinsurance activities. There are two main categories of reinsurance transactions: 1) āindemnity,ā where we cede a portion of our risk but retain the legal responsibility to our policyholders should our reinsurers not meet their financial obligations; and 2) āassumption,ā where we transfer the risk and legal responsibilities to the reinsurers. The reinsurers are required to acquire the appropriate regulatory and policyholder approvals to convert indemnity policies to assumption policies. Our reinsurers may be domestic or foreign capital markets investors or traditional reinsurance companies seeking to assume U.S. insurance business. We plan to mitigate the credit risk relating to reinsurers generally by requiring other financial commitments from the reinsurers to secure the reinsured risks (such as posting substantial collateral). It should be noted that under indemnity reinsurance agreements American Life remains exposed to the credit risk of its reinsurers. If one or more reinsurers become insolvent or are otherwise unable or unwilling to pay claims under the terms of the applicable reinsurance agreement, American Life retains legal responsibility to pay policyholder claims, which, in such event would likely materially and adversely affect the capital and surplus of American Life. As indicated above under āNature of Operations,ā Midwest formed Seneca Re in early 2020. On April 15, 2020, Midwest entered into an operating agreement with Seneca Re and as of June 30, 2021, Seneca Re has one incorporated cell, Seneca Incorporated Cell, LLC 2020-01 (āSRC1ā) which was consolidated in our financial statements. As set forth under āNature of Operations,ā effective December 8, 2020, American Life entered into a novation agreement with SRC2 and Crestline Re SPC, for and on behalf of Crestline Re SP1, under which the above-described reinsurance, trust and related asset management agreements were novated and replaced with substantially similar agreements entered into by American Life and Crestline Re SP1. Some reinsurers are not and may not be āaccreditedā or qualified as reinsurers under Nebraska Law. In order to enter into reinsurance agreements with such reinsurers and to reduce potential credit risk, American Life holds a deposit or withholds funds from the reinsurer or requires the reinsurer to maintain a trust that holds assets backing up the reinsurerās obligation to pay claims on the business it assumes. The reinsurer may also appoint an investment manager for such funds, which in some cases may be our investment adviser subsidiary, 1505 Capital, to manage these assets pursuant to guidelines adopted by us that are consistent with Nebraska investment statutes and reinsurance regulations. American Life currently has treaties with several third-party reinsurers and one related party reinsurer. Of the third-party reinsurers, only four have FW or Modco provisions. In a Modco arrangement, the ceding entity retains the assets equal to the modified coinsurance reserves retained. In a FW agreement, assets that would normally be paid over to a reinsurer are withheld by the ceding company to permit statutory credit for unauthorized reinsurers, to reduce the potential credit risk. Under those provisions with third-party reinsurers, the assets backing the treaties are maintained by American Life as investments but the assets and total returns or losses on the investments are owned by the reinsurers. Under GAAP, this arrangement is considered an embedded derivative as discussed in Comprehensive (Loss) Income and Note 5 below. Assets carried as investments on American Lifeās financial statements for the third-party reinsurers contained unrealized gains of approximately $3.3 million and $2.9 million as of June 30, 2021 and December 31, 2020, respectively. The terms of the contracts with the third-party reinsurers provide that unrealized gains on the portfolios accrue to the third-party reinsurers. Accordingly, the unrealized gains on the assets held by American Life were offset by losses in the embedded derivative of $440,000 and $2.9 million as of June 30, 2021 and December 31, 2020, respectively. We account for this unrealized loss pass-through by recording equivalent realized losses on our Consolidated Statements of Comprehensive (Loss) Income and in amount payable to our third-party reinsurers on the Consolidated Balance Sheets. For further discussion see Note 5. Derivative Instruments below. |
Benefit reserves | Benefit reserves The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future policy benefits of traditional life insurance have been computed by a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables. |
Policy claims | Policy claims Policy claims are based on reported claims plus estimated incurred but not reported claims developed from trends of historical data applied to current exposure. |
Deposit-type contracts | Deposit-type contracts Deposit-type contracts consist of amounts on deposit associated with deferred annuities, premium deposit funds and supplemental contracts without life contingencies. |
Deferred gain on coinsurance transactions | Deferred gain on coinsurance transactions American Life has entered into several reinsurance contracts where it has earned or is earning ceding commissions. These ceding commissions are recorded as a deferred liability and amortized over the life of the business ceded. American Life receives commission, administrative, and option allowances from reinsurance transactions that represent recovery of acquisition costs. These allowances first reduce the DAC associated with the reinsured blocks of business with the remainder being included in the deferred gain on coinsurance transactions that is also being amortized. |
Income taxes | Income taxes The Company is subject to income taxes in the U.S. federal and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state, or local tax examinations by tax authorities for the years before 2017. The Company is not currently under examination for any open years. The provision for income taxes is based on income as reported in the financial statements. The income tax provision is calculated under the asset and liability method. Deferred tax assets are recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. The Company has no uncertain tax positions that it believes are more-likely-than not that the benefit will not to be realized. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. |
Revenue recognition and related expenses | Revenue recognition and related expenses Amounts received as payment for annuities are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of fees earned for administrative and contract-holder services and cost of insurance, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows. Revenues from ceding commissions on traditional life and annuity products are deferred on the Consolidated Balance Sheets and amortized over the life of the policies. Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due. Liabilities for future policy benefits are provided and acquisition costs are amortized by associating benefits and expenses with earned premiums to recognize related profits over the life of the contracts. Acquisition costs are amortized over the expected life of the annuity contracts. Revenues on service fees and third-party administration fees are recorded as income when incurred. |
Comprehensive (Loss) Income | Comprehensive (Loss) Income Comprehensive (Loss) Income is comprised of net (loss) income and other comprehensive (Loss) Income. Other comprehensive (Loss) Income includes unrealized gains and losses from fixed maturities classified as available for sale and unrealized gains and losses from foreign currency transactions, net of applicable taxes. American Life has treaties with several third-party reinsurers that have FW and Modco provisions. Under those provisions, the assets backing the treaties are maintained by American Life as collateral but are owned by the third-party reinsurers, thus, the total return on the asset portfolio belongs to the third-party reinsurers. Under GAAP this is considered an embedded derivative as discussed above under āReinsuranceā and in Note 5 below. The investments carried by American Life for the third-party reinsurers contained unrealized gains of approximately $3.3 million and $2.9 million as of June 30, 2021 and December 31, 2020, respectively. The terms of the contracts with the third-party reinsurers provided that unrealized gains and losses on the portfolios accrue to the third-party reinsurers. We account for a gain as a pass through to the third-party reinsurer by booking equivalent embedded derivative realized losses or gains in our Consolidated Statements of Comprehensive (Loss) Income. Accordingly, for the three months ended June 30, 2021 and 2020, such losses of $843,000 and $14.8 million, respectively, were recorded. For the six months ended June 30, 2021 and 2020, such unrealized losses of $440,000 and gains of $8.5 million, respectively, were recorded. The remaining investments retained by American Life as of June 30, 2021 and December 31, 2020, had unrealized gains of approximately $5.0 million and $5.1 million, respectively, that included unrealized gains from assets held for SRC1. For further discussion see Note 5. Derivative Instruments below. Basic loss per share for the three months ended June 30, 2021 and 2020 was ($1.34) and ($6.53), respectively, which included the aforementioned losses of $843,000 and $14.8 million, respectively. Basic (loss) earnings per share for the six months ended June 30, 2021 and 2020 was ($1.76) and $2.19, respectively, which included the aforementioned loss of $440,000 and unrealized gains of $8.5 million, respectively. Basic loss per share for the three months ended June 30, 2021 and 2020 without the aforementioned gain was ($1.10) and ($0.69), respectively. Basic loss per share for the six months ended June 30, 2021 and 2020 without the aforementioned gain was ($1.88) and ($1.04), respectively. See Note 7 for further information. |
Reclassifications | Reclassifications Certain reclassifications have been made on the Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2020. These reclassifications do not impact the overall net loss or net loss per common shares line items of the Consolidated Statement of Comprehensive (Loss) Income for the three and six months ended June 30, 2021. |
Adoption of New Accounting Standards | Adoption of New Accounting Standards In January 2020, the FASB issued ASU No. 2020-1, Equity Securities Investments-Equity Method and Joint Ventures and Derivatives and Hedging -Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. Future adoption of New Accounting Standards In November 2019, the FASB issued ASU No. 2019-10, Financials Services Instruments-Credit Losses Derivatives and Hedging Leases Financial Services-Insurance In December 2018, the FASB issued ASU No. 2018-12, Financial ServicesāInsurance Financial Services āInsurance In November 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 326, Financial InstrumentsāCredit Losses. Financial Instruments ā Credit Losses |
Assets and Liabilities Associ_2
Assets and Liabilities Associated with Business Held for Sale (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Assets and Liabilities Discontinued Operations | The table below summarizes the assets and liabilities that are included in discontinued operations as of June 30, 2021 and as of December 31, 2020: ā ā ā ā ā ā ā ā ā ā As of June 30, ā As of December 31, ā 2021 2020 Carrying amounts of major classes of assets included as part of discontinued operations: ā ā Policy loans ā $ 24,985 ā $ 33,161 Reinsurance recoverables ā 1,014,680 ā 1,061,979 Premiums receivable ā 18,515 ā 23,643 Total assets held for sale in the Consolidated Balance Sheets ā $ 1,058,180 ā $ 1,118,783 ā ā ā ā ā ā ā Carrying amounts of major classes of liabilities included as part of discontinued operations: ā ā Benefit reserves ā $ 563,218 ā $ 594,710 Policy claims ā 36,747 ā 35,302 Deposit-type contracts ā 451,899 ā 482,966 Advance premiums ā 159 ā 71 Accounts payable and accrued expenses ā 1,203 ā 1,263 Total liabilities held for sale in the Consolidated Balance Sheets ā $ 1,053,226 ā $ 1,114,312 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Schedule of Available for Sale Investments | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Gross ā Gross ā ā ā ā ā Amortized ā Unrealized ā Unrealized ā Estimated ā Cost Gains Losses Fair Value June 30, 2021: ā ā ā ā Fixed maturities: ā ā ā ā U.S. government obligations ā $ 1,946,573 ā $ 60,537 ā $ 3,976 ā $ 2,003,134 Mortgage-backed securities ā 40,399,566 ā 896,057 ā 6,208 ā 41,289,415 Collateralized loan obligations ā ā 319,085,884 ā ā 5,352,514 ā ā 340,837 ā ā 324,097,561 States and political subdivisions -- general obligations ā 105,923 ā 12,261 ā ā ā 118,184 States and political subdivisions -- special revenue ā 5,417,397 ā 1,112,529 ā 3,800 ā 6,526,126 Trust preferred ā ā 16,291,342 ā ā 200,973 ā ā 26,400 ā ā 16,465,915 Corporate ā 197,667,477 ā 2,255,997 ā 1,562,548 ā 198,360,926 Total fixed maturities ā $ 580,914,162 ā $ 9,890,868 ā $ 1,943,769 ā $ 588,861,261 Mortgage loans on real estate, held for investment ā ā 130,372,068 ā ā ā ā ā ā ā ā 130,372,068 Derivatives ā ā 12,913,546 ā ā 4,992,636 ā ā 1,483,788 ā ā 16,422,394 Federal Home Loan Bank (FHLB) stock ā ā 500,000 ā ā ā ā ā ā ā ā 500,000 Other invested assets ā ā 40,490,291 ā ā 1,591,080 ā ā 1,268,195 ā ā 40,813,176 Notes receivable ā ā 5,810,328 ā ā ā ā ā ā ā ā 5,810,328 Policy loans ā ā 51,529 ā ā ā ā ā ā ā ā 51,529 Total investments ā $ 771,051,924 ā $ 16,474,584 ā $ 4,695,752 ā $ 782,830,756 ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2020: ā ā ā ā Fixed maturities: ā ā ā ā ā ā ā ā ā ā ā ā U.S. government obligations ā ā 5,744,221 ā $ 426,427 ā $ 5,665 ā ā 6,164,983 Mortgage-backed securities ā ā 14,638,299 ā 276,219 ā 157,104 ā ā 14,757,414 Asset-backed securities ā ā 216,500,672 ā ā 5,623,083 ā ā 350,146 ā ā 221,773,609 States and political subdivisions -- general obligations ā ā 106,528 ā 10,802 ā ā ā ā 117,330 States and political subdivisions -- special revenue ā ā 5,293,365 ā 908,986 ā 147 ā ā 6,202,204 Trust preferred ā ā 2,218,142 ā ā 66,674 ā ā ā ā ā 2,284,816 Corporate ā ā 124,654,841 ā 1,379,513 ā 171,352 ā ā 125,863,002 Total fixed maturities ā ā 369,156,068 ā ā 8,691,704 ā ā 684,414 ā ā 377,163,358 Mortgage loans on real estate, held for investment ā ā 94,989,970 ā ā ā ā ā ā ā ā 94,989,970 Derivatives ā ā 8,532,252 ā ā 3,257,069 ā ā 428,287 ā ā 11,361,034 Other invested assets ā ā 21,897,130 ā ā ā ā ā ā ā ā 21,897,130 Investment escrow ā ā 3,174,047 ā ā ā ā ā ā ā ā 3,174,047 Notes receivable ā ā 5,665,487 ā ā ā ā ā ā ā ā 5,665,487 Policy loans ā ā 45,573 ā ā ā ā ā ā ā ā 45,573 Total investments ā $ 503,460,527 ā $ 11,948,773 ā $ 1,112,701 ā $ 514,296,599 |
Schedule of credit ratings of fixed maturity securities | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā Carrying ā ā ā Carrying ā ā ā Value Percent Value Percent AAA and U.S. Government ā $ 19,761,963 3.4 % $ 3,070,750 0.8 % AA ā 652,443 0.1 ā 5,818,163 1.5 ā A ā 105,264,686 17.9 ā 49,445,266 13.1 ā BBB ā 395,104,517 67.0 ā 247,635,730 65.7 ā Total investment grade ā 520,783,609 88.4 ā 305,969,909 81.1 ā BB and other ā 68,077,652 11.6 ā 71,193,449 18.9 ā Total ā $ 588,861,261 100.0 % $ 377,163,358 100.0 % |
Schedule of Unrealized Loss of Securities | The following table summarizes, for all fixed maturity securities in an unrealized loss position as of June 30, 2021 and December 31, 2020, the estimated fair value, pre-tax gross unrealized loss, and number of securities by consecutive months they have been in an unrealized loss position. ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā ā ā ā Gross ā Number ā ā ā ā Gross ā Number ā ā Estimated ā Unrealized ā of ā Estimated ā Unrealized ā of ā Fair Value Loss Securities (1) Fair Value Loss Securities (1) Fixed Maturities: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Less than 12 months: ā ā ā ā ā U.S. government obligations ā $ 13,087 ā $ 1,079 6 ā $ 54,910 ā $ 180 ā 2 Mortgage-backed securities ā 1,089,454 ā 6,208 2 ā 5,707,617 ā 157,104 ā 5 Collateralized loan obligations ā ā 51,350,944 ā ā 337,107 ā ā 59 ā ā 14,878,370 ā ā 246,969 ā ā 19 States and political subdivisions -- special revenue ā 532,613 ā 3,800 4 ā 5,584 ā 147 ā 1 Trust preferred ā ā 3,073,200 ā ā 26,400 ā ā 1 ā ā ā ā ā ā ā ā ā Corporate ā 75,670,436 ā 1,533,987 45 ā 3,859,616 ā 104,262 ā 7 Greater than 12 months: ā ā ā ā ā U.S. government obligations ā 74,180 ā 2,897 3 ā 119,700 ā 5,485 ā 4 Collateralized loan obligations ā 496,269 ā 3,730 1 ā 7,020,479 ā 103,177 ā 6 Corporate ā 323,741 ā ā 28,561 3 ā 287,473 ā ā 67,090 ā 3 Total fixed maturities ā $ 132,623,924 ā $ 1,943,769 124 ā $ 31,933,749 ā $ 684,414 ā ā 47 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā (1) We may reflect a security in more than one aging category based on various purchase dates. |
Schedule of Fixed Maturities | ā ā ā ā ā ā ā ā ā ā Amortized ā Estimated ā Cost Fair Value Due in one year or less ā $ 20,656,659 ā $ 20,667,447 Due after one year through five years ā 136,423,479 ā 135,997,644 Due after five years through ten years ā 150,814,326 ā 153,866,190 Due after ten years through twenty years ā ā 214,535,543 ā ā 217,549,784 Due after twenty years ā ā 58,484,155 ā ā 60,780,196 ā ā $ 580,914,162 ā $ 588,861,261 |
Schedule of investment in mortgage loans | ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 Loan-to-Value Ratio: ā ā ā ā ā 0%-59.99% $ 108,636,962 ā $ 49,279,601 60%-69.99% ā 17,904,153 ā ā 22,349,295 70%-79.99% ā 3,830,953 ā ā 23,361,074 80% or greater ā ā ā ā ā Total mortgage loans $ 130,372,068 ā $ 94,989,970 |
Components of net investment income | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, ā 2021 2020 2021 2020 Fixed maturities ā $ 4,088,461 ā $ (128,209) ā $ 7,068,321 ā $ 1,041,929 Mortgage loans ā ā 366,717 ā ā ā ā ā 540,495 ā ā ā Other invested assets ā ā 96,054 ā ā ā ā ā 151,867 ā ā ā Other interest income ā 81,247 ā ā ā 152,165 ā ā Gross investment income ā 4,632,479 ā (128,209) ā 7,912,848 ā 1,041,929 Less: investment expenses ā (1,412,453) ā (269,633) ā (1,805,459) ā (198,793) Investment income, net of expenses ā $ 3,220,026 ā $ (397,842) ā $ 6,107,389 ā $ 843,136 |
Mortgage-back securities | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Schedule of Mortgage Loan Activity | ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā ā December 31, 2020 Industrial ā $ ā ā $ 1,250,000 Commercial mortgage loan - multi-family ā ā 62,824,086 ā ā 66,916,151 Other ā ā 67,547,982 ā ā 26,823,819 Total mortgage loans ā $ 130,372,068 ā $ 94,989,970 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of the derivatives not designated as hedges | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā Location in the ā ā ā ā ā ā ā ā ā ā ā ā ā Consolidated ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Derivatives Not Designated ā Statement of Notional ā Number of ā Estimated ā Notional ā Number of ā Estimated as Hedging Instruments ā Balance Sheets Amount ā Contracts ā Fair Value ā Amount ā Contracts ā Fair Value Equity-indexed options ā Derivatives $ 448,486,517 ā 399 ā $ 15,012,157 ā $ 272,853,853 ā 252 ā $ 11,361,034 Equity-indexed ā Deposit-type ā 442,680,823 ā 3,401 ā ā 100,561,244 ā ā 311,964,195 ā 2,101 ā ā 84,501,492 |
Summary of embedded derivatives related to the funds withheld provision | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā Book Value ā Market Value ā Total Return ā Book Value ā Market Value ā Total Return Portfolio ā Assets ā Assets ā Swap Value ā Assets ā Assets ā Swap Value American Republic Insurance Company ā $ 28,157,500 ā $ 28,200,539 ā $ (43,039) ā $ ā ā $ ā ā $ ā Crestline Re SP1 ā ā 77,675,300 ā ā 79,279,242 ā ā (1,603,942) ā ā 62,162,766 ā ā 63,130,867 ā ā (968,101) Ironbound ā ā 105,981,525 ā ā 107,398,336 ā ā (1,416,811) ā ā 98,714,156 ā ā 99,747,812 ā ā (1,033,656) SDA ā ā 30,075,323 ā ā 30,139,665 ā ā (64,342) ā ā 27,224,279 ā ā 27,479,836 ā ā (255,557) US Alliance ā ā 38,142,204 ā ā 38,362,973 ā ā (220,769) ā ā 35,707,207 ā ā 36,360,501 ā ā (653,294) Total ā $ 280,031,852 ā $ 283,380,755 ā $ (3,348,903) ā $ 223,808,408 ā $ 226,719,016 ā $ (2,910,608) |
Fair Values of Financial Inst_2
Fair Values of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Investments, All Other Investments [Abstract] | |
Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Significant ā ā ā ā ā ā ā ā Quoted ā Other ā Significant ā ā ā ā ā In Active ā Observable ā Unobservable ā Estimated ā ā Markets ā Inputs ā Inputs ā Fair ā (Level 1) (Level 2) (Level 3) Value June 30, 2021 ā ā ā ā Financial assets ā ā ā ā ā ā ā ā ā ā ā ā Fixed maturity securities: ā ā ā ā U.S. government obligations ā $ ā ā $ 2,003,134 ā $ ā ā $ 2,003,134 Mortgage-backed securities ā ā ā ā ā 41,289,415 ā ā ā ā ā 41,289,415 Collateralized loan obligations ā ā ā ā ā 324,097,561 ā ā ā ā ā 324,097,561 States and political subdivisions ā general obligations ā ā ā 118,184 ā ā ā 118,184 States and political subdivisions ā special revenue ā ā ā 6,526,126 ā ā ā 6,526,126 Trust preferred ā ā ā ā ā 16,465,915 ā ā ā ā ā 16,465,915 Corporate ā ā ā 34,112,080 ā 164,248,846 ā 198,360,926 Total fixed maturity securities ā ā ā ā ā 424,612,415 ā ā 164,248,846 ā ā 588,861,261 Mortgage loans on real estate, held for investment ā ā ā ā ā ā ā ā 130,372,068 ā ā 130,372,068 Derivatives ā ā ā ā ā 16,422,394 ā ā ā ā ā 16,422,394 Equity securities ā ā ā ā ā 46,924,170 ā ā ā ā ā 46,924,170 Other invested assets ā ā ā ā ā ā ā ā 40,813,176 ā ā 40,813,176 Federal Home Loan Bank (FHLB) stock ā ā ā ā ā ā ā ā 500,000 ā ā 500,000 Preferred stock ā ā ā ā ā ā ā ā 4,728,375 ā ā 4,728,375 Notes receivable ā ā ā ā ā 5,810,328 ā ā ā ā ā 5,810,328 Policy loans ā ā ā ā ā ā ā ā 51,529 ā ā 51,529 Total Investments ā $ ā ā $ 493,769,307 ā $ 340,713,994 ā $ 834,483,301 Financial liabilities ā ā ā ā ā ā ā ā ā ā ā ā Embedded derivative for equity-indexed contracts ā $ ā ā $ ā ā $ 100,561,244 ā ā 100,561,244 ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2020 ā ā ā ā ā Fixed maturity securities: ā ā ā ā U.S. government obligations ā $ ā ā $ 6,164,983 ā $ ā ā $ 6,164,983 Mortgage-backed securities ā ā ā ā ā 14,757,414 ā ā ā ā ā 14,757,414 Collateralized loan obligations ā ā ā ā ā 221,773,609 ā ā ā ā ā 221,773,609 States and political subdivisions ā general obligations ā ā ā 117,330 ā ā ā 117,330 States and political subdivisions ā special revenue ā ā ā 6,202,204 ā ā ā 6,202,204 Trust preferred ā ā ā ā ā 2,284,816 ā ā ā ā ā 2,284,816 Corporate ā ā ā 18,608,995 ā 107,254,007 ā 125,863,002 Total fixed maturity securities ā ā ā ā ā 269,909,351 ā ā 107,254,007 ā ā 377,163,358 Mortgage loans on real estate, held for investment ā ā ā ā ā ā ā ā 94,989,970 ā ā 94,989,970 Derivatives ā ā ā ā ā 11,361,034 ā ā ā ā ā 11,361,034 Other invested assets ā ā ā ā ā ā ā ā 21,897,130 ā ā 21,897,130 Investment escrow ā ā ā ā ā 3,174,047 ā ā ā ā ā 3,174,047 Preferred stock ā ā ā ā ā ā ā ā 3,897,980 ā ā 3,897,980 Notes receivable ā ā ā ā ā 5,665,487 ā ā ā ā ā 5,665,487 Policy loans ā ā ā ā ā ā ā ā 45,573 ā ā 45,573 Total Investments ā $ ā ā $ 290,109,919 ā $ 228,084,660 ā $ 518,194,579 Financial liabilities ā ā ā ā ā ā ā ā ā ā ā ā Embedded derivative for equity-indexed contracts ā $ ā ā $ ā ā $ 84,501,492 ā ā 84,501,492 |
Schedule of Financial Assets and Liabilities at Fair Value | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā ā ā ā ā Fair Value Measurements Using ā ā ā ā ā Quoted Prices in ā ā ā ā ā ā ā ā ā ā ā ā ā ā Active Markets ā Significant Other ā Significant ā ā ā ā ā ā ā ā for Identical Assets ā Observable ā Unobservable ā ā ā ā ā Carrying ā and Liabilities ā Inputs ā Inputs ā Fair ā Amount (Level 1) (Level 2) (Level 3) Value Assets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Policy loans ā $ 51,529 ā $ ā ā $ ā ā $ 51,529 ā $ 51,529 Cash and cash equivalents ā 70,278,979 ā 61,217,719 ā 9,061,260 ā ā ā 70,278,979 Liabilities: ā ā ā ā ā Policyholder deposits (Deposit-type contracts) ā 848,714,996 ā ā ā ā ā 848,714,996 ā 848,714,996 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2020 ā ā ā ā ā Fair Value Measurements Using ā ā ā ā ā Quoted Prices in ā ā ā ā ā ā ā ā ā ā ā ā ā ā Active Markets ā Significant Other ā Significant ā ā ā ā ā ā ā ā for Identical Assets ā Observable ā Unobservable ā ā ā ā ā Carrying ā and Liabilities ā Inputs ā Inputs ā Fair ā Amount (Level 1) (Level 2) (Level 3) Value Assets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Policy loans ā $ 45,573 ā $ ā ā $ ā ā $ 45,573 ā $ 45,573 Cash and cash equivalents ā 151,679,274 ā 100,566,580 ā 51,112,694 ā ā ā 151,679,274 Liabilities: ā ā ā ā ā Policyholder deposits (Deposit-type contracts) ā 597,868,472 ā ā ā ā ā 597,868,472 ā 597,868,472 |
Schedule of Recurring Basis Using Level Three Inputs | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā As of ā ā ā ā ā ā ā As of ā ā December 31, ā ā ā ā ā ā ā ā June 30, ā 2020 Additions Sales 2021 Assets ā ā ā ā Fixed maturities ā $ 107,254,007 ā $ 103,910,243 ā $ 46,915,404 ā ā 164,248,846 Mortgage loans on real estate, ā ā ā ā ā ā ā ā ā ā ā ā held for investment ā ā 94,989,970 ā ā 51,978,684 ā ā 16,596,586 ā ā 130,372,068 Federal Home Loan Bank (FHLB) stock ā ā ā ā ā 500,000 ā ā ā ā ā 500,000 Other invested assets ā ā 21,897,130 ā ā 35,831,450 ā ā 16,915,404 ā ā 40,813,176 Preferred stock ā ā 3,897,980 ā ā 830,395 ā ā ā ā ā 4,728,375 Total Investments ā $ 228,039,087 ā $ 193,050,772 ā $ 80,427,394 ā $ 340,662,465 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā As of ā ā ā ā ā ā ā ā ā ā ā ā As of ā ā December 31, ā ā ā ā ā ā ā ā Valuation ā ā ā ā December 31, ā 2019 Additions Sales ā Allowance ā Impairment ā 2020 Assets ā ā ā ā ā ā ā ā ā Fixed maturities ā $ ā ā $ 107,254,007 ā $ ā ā $ ā ā $ ā ā $ 107,254,007 Mortgage loans on real ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā estate, held for investment ā ā 13,810,041 ā ā 99,356,435 ā ā 18,176,506 ā ā ā ā ā ā ā ā 94,989,970 Other invested assets ā ā 2,468,947 ā ā 74,722,714 ā ā 54,517,558 ā ā (776,973) ā ā ā ā ā 21,897,130 Preferred stock ā ā 500,000 ā ā 3,897,980 ā ā ā ā ā ā ā ā (500,000) ā ā 3,897,980 Total Investments ā $ 16,778,988 ā $ 285,231,136 ā $ 72,694,064 ā $ (776,973) ā $ (500,000) ā $ 228,039,087 |
Summary of unobservable inputs for AFS and trading securities | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 (In millions, except for percentages) ā Fair value ā Valuation technique ā Unobservable inputs ā Minimum ā Maximum ā Weighted average* ā Impact of an increase in the input on fair value Interest sensitive contract liabilities - fixed indexed annuities embedded derivatives ā $100.6 ā Option Budget Method ā Nonperformance risk ā 0.2% ā 1.1% ā 0.6% ā Decrease ā ā ā ā ā ā Option budget ā 1.1% ā 3.4% ā 2.4% ā Increase ā ā ā ā ā ā Surrender rate ā 0.5% ā 15% (base) ā 7.4% ā Decrease * Weighted by account value ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā December 31, 2020 (In millions, except for percentages) ā Fair value ā Valuation technique ā Unobservable inputs ā Minimum ā Maximum ā Weighted average* ā Impact of an increase in the input on fair value Interest sensitive contract liabilities - fixed indexed annuities embedded derivatives ā $84.5 ā Option Budget Method ā Nonperformance risk ā 0.3% ā 1.3% ā 0.7% ā Decrease ā ā ā ā ā ā Option budget ā 2.6% ā 3.4% ā 2.7% ā Increase ā ā ā ā ā ā Surrender rate ā 0.5% ā 15% (base) ā 7.6% ā Decrease * Weighted by account value ā ā ā ā ā ā ā ā ā ā ā ā ā ā |
Income Tax Matters (Tables)
Income Tax Matters (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | Significant components of the Companyās deferred tax assets and liabilities as of June 30, 2021 and December 31, 2020 were as follows: ā ā ā ā ā ā ā ā ā June 30, 2021 December 31, 2020 Deferred tax assets: ā ā Loss carryforwards ā $ 1,741,665 ā $ 1,556,855 Capitalized costs ā 150,587 ā 174,364 Stock option granted ā ā 385,879 ā ā 14,270 Unrealized losses on investments ā 1,020,949 ā 1,534,332 Policy acquisition costs ā ā 2,637,502 ā ā 2,243,267 Charitable contribution carryforward ā ā 2,490 ā ā 2,490 Sec 163(j) limitation ā ā 153,809 ā ā 153,809 Benefit reserves ā 5,769,577 ā 3,568,914 Total deferred tax assets ā 11,862,458 ā 9,248,301 Less valuation allowance ā (9,934,913) ā (7,001,687) Total deferred tax assets, net of valuation allowance ā 1,927,545 ā 2,246,614 Deferred tax liabilities: ā ā Unrealized losses on investments ā 1,665,273 ā 1,994,232 Due premiums ā 81,789 ā 81,789 Intangible assets ā 147,000 ā 147,000 Bond Discount ā ā 29,327 ā ā 20,556 Property and equipment ā 4,156 ā 3,037 Total deferred tax liabilities ā 1,927,545 ā 2,246,614 Net deferred tax assets ā $ ā ā $ ā |
Schedule of effective tax rate reconciliation | There was income tax expense for the three months ended June 30, 2021 and 2020 of $746,689 and $479,513, respectively, and income tax expense for the six months ended June 30, 2021 and 2020 of $2.2 million and $887,429, respectively. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% to pretax income, as a result of the following: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, ā 2021 2020 2021 2020 Computed expected income tax benefit ā $ (891,741) ā $ (3,372,144) ā $ (927,045) ā $ 1,238,695 Increase (reduction) in income taxes resulting from: ā ā ā ā ā ā IMR and reinsurance ā ā 107,961 ā ā ā ā ā 175,006 ā ā ā Nondeductible expenses ā ā 1,549 ā ā 319 ā ā 3,003 ā ā 2,930 Change in valuation allowance ā 1,531,497 ā 4,169,372 ā 2,933,227 ā ā 21,682 Dividends received deduction ā ā (2,577) ā ā ā ā ā (5,154) ā ā ā Other ā ā ā ā ā (318,034) ā ā ā ā ā (375,878) Subtotal of increases ā 1,638,430 ā 3,851,657 ā 3,106,082 ā (351,266) Tax expense ā $ 746,689 ā $ 479,513 ā $ 2,179,037 ā $ 887,429 |
Reinsurance (Tables)
Reinsurance (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Reinsurance Disclosures [Abstract] | |
Summary of significant reinsurance amounts | A summary of significant reinsurance amounts affecting the accompanying consolidated financial statements as of June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and, 2020, respectively, are as follows: ā ā ā ā ā ā ā ā ā June 30, 2021 December 31, 2020 Assets: ā ā Reinsurance recoverables ā $ 45,237,046 ā $ 32,146,042 Liabilities: ā ā ā ā ā ā Deposit-type contracts ā ā ā ā ā ā Direct ā $ 848,714,996 ā ā 597,868,472 Reinsurance ceded ā ā (539,987,972) ā ā (405,981,150) Retained deposit-type contracts ā $ 308,727,024 ā $ 191,887,322 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, ā 2021 2020 ā 2021 2020 ā ā ā ā ā ā Premiums ā ā ā ā ā ā ā ā ā ā ā ā Direct ā $ 53,397 ā $ 221,435 ā $ 101,484 ā $ 453,108 Reinsurance ceded ā ā (53,397) ā ā (221,435) ā ā (101,484) ā ā (453,108) Total Premiums ā $ ā ā $ ā ā $ ā ā $ ā Future policy and other policy benefits ā ā ā ā ā ā ā ā ā ā ā ā Direct ā ā 14,592 ā ā 18,405 ā $ 21,448 ā 52,799 Reinsurance ceded ā (14,592) ā (18,405) ā (21,448) ā (52,799) Total future policy and other policy benefits ā $ ā ā $ ā ā $ ā ā $ ā |
Schedule of significant reinsurance balances | The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by third-party reinsurers except for a reinsurance with Unified as it was accounted for as discontinued operations as of June 30, 2021: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Recoverable/ ā ā ā ā Total Amount ā ā ā ā ā Recoverable ā Recoverable ā (Payable) on Benefit ā Ceded ā Recoverable/ ā ā AM Best ā on Paid ā on Unpaid ā Reserves/Deposit- ā Due ā (Payable) to/from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Ironbound Reinsurance Company Limited ā ā NR ā $ ā ā $ ā ā $ (1,606,577) ā $ ā ā $ (1,606,577) Optimum Re Insurance Company ā A ā ā ā ā ā ā ā ā 555,636 ā ā ā ā ā 555,636 Sagicor Life Insurance Company ā A- ā ā ā 148,662 ā 10,871,729 ā 290,669 ā 10,729,722 SDA Annuity & Life Re ā ā NR ā ā ā ā ā ā ā ā 4,331,106 ā ā ā ā ā 4,331,106 Crestline SP1 ā ā NR ā ā ā ā ā ā ā ā 17,495,505 ā ā ā ā ā 17,495,505 American Republic Insurance Company ā ā NR ā ā ā ā ā ā ā ā 5,994,880 ā ā ā ā ā 5,994,880 US Alliance Life and Security Company ā NR ā ā ā ā ā 7,779,414 ā 42,640 ā 7,736,774 ā ā ā ā ā $ ā ā $ 148,662 ā $ 45,421,693 ā $ 333,309 ā $ 45,237,046 The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by reinsurer except for Unified as it is accounted for as discontinued operations as of December 31, 2020: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Recoverable on ā ā ā ā Total Amount ā ā ā ā ā Recoverable ā Recoverable ā Benefit ā Ceded ā Recoverable ā ā AM Best ā on Paid ā on Unpaid ā Reserves/Deposit- ā Due ā from Reinsurer Rating Losses Losses type Contracts Premiums Reinsurer Optimum Re Insurance Company ā A ā $ ā ā $ ā ā $ 524,734 ā $ ā ā $ 524,734 Sagicor Life Insurance Company ā A- ā ā ā 141,107 ā 11,285,364 ā 276,596 ā 11,149,875 SDA Annuity & Life Re ā ā NR ā ā ā ā ā ā ā ā 3,540,697 ā ā ā ā ā 3,540,697 Crestline SP1 ā ā NR ā ā ā ā ā ā ā ā 9,695,427 ā ā ā ā ā 9,695,427 US Alliance Life and Security Company ā NR ā ā ā ā ā 7,264,229 ā 28,920 ā 7,235,309 ā ā ā ā ā $ ā ā $ 141,107 ā $ 32,310,451 ā $ 305,516 ā $ 32,146,042 |
Schedule of ceding commissions from the reinsurers | ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā ā 2021 ā 2020 Reinsurer ā Gross Ceding Commission ā Expense (1) ā Interest on Ceding Commission ā Earned ā Gross Ceding Commission ā Expense ā Interest on Ceding Commission ā Earned Ironbound Reinsurance Company Limited ā $ ā ā $ 14,383 ā $ 53,835 ā $ 122,807 ā $ 13,465 ā $ 5,464 ā $ 64,653 ā $ 93,086 SDA Annuity & Life Re ā ā ā ā ā 20,724 ā ā 21,659 ā ā 44,694 ā ā 569,747 ā ā 1,080,386 ā ā 16,001 ā ā 11,188 US Alliance Life and Security Company ā ā ā ā ā 17,439 ā ā 15,154 ā ā 54,055 ā ā 2,272,784 ā ā 4,009,102 ā ā 7,711 ā ā 10,465 Crestline Re SP 1 ā ā 2,032,041 ā ā 4,096,569 ā ā 60,562 ā ā 282,598 ā ā ā ā ā ā ā ā ā ā ā ā American Republic Insurance Company ā ā 2,222,882 ā ā 4,378,915 ā ā 12,222 ā ā 68,663 ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 4,254,923 ā $ 8,528,030 ā $ 163,432 ā $ 572,817 ā $ 2,855,996 ā $ 5,094,952 ā $ 88,365 ā $ 114,739 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Six months ended June 30, ā ā 2021 ā 2020 Reinsurer ā Gross Ceding Commission ā Expense (1) ā Interest on Ceding Commission ā Earned ā Gross Ceding Commission ā Expense ā Interest on Ceding Commission ā Earned Ironbound Reinsurance Company Limited ā $ ā ā $ 28,840 ā $ 108,280 ā $ 245,023 ā $ 688,110 ā $ 679,076 ā $ 110,022 ā $ 188,826 SDA Annuity & Life Re ā ā ā ā ā 45,041 ā ā 43,371 ā ā 90,766 ā ā 868,729 ā ā 1,628,850 ā ā 29,527 ā ā 18,341 US Alliance Life and Security Company ā ā 2,178 ā ā 38,174 ā ā 30,493 ā ā 120,661 ā ā 2,272,784 ā ā 4,009,102 ā ā 7,711 ā ā 10,465 Crestline SP1 ā ā 4,377,176 ā ā 8,774,776 ā ā 110,417 ā ā 498,360 ā ā ā ā ā ā ā ā ā ā ā ā American Republic Insurance Company ā ā 2,222,882 ā ā 4,378,915 ā ā 12,222 ā ā 68,663 ā ā ā ā ā ā ā ā ā ā ā ā ā ā $ 6,602,236 ā $ 13,265,746 ā $ 304,783 ā $ 1,023,473 ā $ 3,829,623 ā $ 6,317,028 ā $ 147,260 ā $ 217,632 ā (1) Includes acquisition and administrative expenses, commission expense allowance and product development fees. ā |
Schedule of ceding commissions deferred on each reinsurance transaction | ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 Reinsurer Deferred Ceding Commission ā Deferred Ceding Commission US Alliance Life and Security Company (1) $ 167,154 ā $ 172,297 Unified Life Insurance Company (1) ā 256,959 ā ā 276,935 Ironbound Reinsurance Company Limited (2) ā ā 5,572,756 ā ā 5,642,095 SDA Annuity & Life Re (2) ā 2,660,401 ā ā 2,703,496 US Alliance Life and Security Company (2) ā ā 2,425,980 ā ā 2,472,559 American Republic Insurance Company (2) ā ā 2,381,002 ā ā ā Crestline SP1 (2) ā ā 11,408,621 ā ā 6,931,375 ā ā $ 24,872,873 ā $ 18,198,757 ā (1) These reinsurance transactions on our legacy life insurance business received gross ceding commissions on the effective dates of the transaction. The difference between the statutory net adjusted reserves and the GAAP adjusted reserves plus the elimination of DAC and value of business acquired related to these businesses reduces the gross ceding commission with the remaining deferred and amortized over the lifetime of the blocks of business. (2) These reinsurance transactions include the ceding commissions and expense allowances which are accounted for as described in (1). |
Schedule of retained and reinsurance balance sheets | The tables below shows the retained and reinsurance condensed balance sheets: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Retained ā Reinsurance ā Consolidated ā Retained ā Reinsurance ā Consolidated Assets ā ā ā ā ā ā ā ā ā ā ā ā ā ā Total investments ā $ 378,874,422 ā $ 455,608,879 ā $ 834,483,301 ā $ 185,367,430 ā $ 332,827,149 ā $ 518,194,579 Cash and cash equivalents ā ā 30,530,673 ā ā 39,748,306 ā ā 70,278,979 ā ā 102,334,579 ā ā 49,344,695 ā ā 151,679,274 Accrued investment income ā ā 3,378,438 ā ā 7,070,431 ā ā 10,448,869 ā ā 1,955,938 ā ā 4,850,898 ā ā 6,806,836 Deferred acquisition costs, net ā ā 21,419,245 ā ā ā ā ā 21,419,245 ā ā 13,456,303 ā ā ā ā ā 13,456,303 Reinsurance recoverables (See Note 9) ā ā ā ā ā 45,237,046 ā ā 45,237,046 ā ā ā ā ā 32,146,042 ā ā 32,146,042 Other assets ā ā 4,143,746 ā ā 1,464,602 ā ā 5,608,348 ā ā 2,685,341 ā ā 1,432,384 ā ā 4,117,725 Total assets ā $ 438,346,524 ā $ 549,129,264 ā $ 987,475,788 ā $ 305,799,591 ā $ 420,601,168 ā $ 726,400,759 Liabilities and Stockholdersā Equity ā ā ā ā ā ā ā ā ā ā ā ā Liabilities: ā ā ā ā ā ā ā ā ā ā ā ā Policyholder liabilities ā $ 308,727,024 ā $ 552,624,529 ā $ 861,351,553 ā $ 191,887,322 ā $ 418,921,167 ā $ 610,808,489 Deferred gain on coinsurance transactions ā ā 24,872,873 ā ā ā ā ā 24,872,873 ā ā 18,198,757 ā ā ā ā ā 18,198,757 Other liabilities ā ā 23,140,192 ā ā (3,495,265) ā ā 19,644,927 ā ā 9,384,013 ā ā 1,680,001 ā ā 11,064,014 Total liabilities ā $ 356,740,089 ā $ 549,129,264 ā $ 905,869,353 ā $ 219,470,092 ā $ 420,601,168 ā $ 640,071,260 Stockholdersā Equity: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Voting common stock ā ā 3,738 ā ā ā ā ā 3,738 ā ā 3,738 ā ā ā ā ā 3,738 Additional paid-in capital ā ā 135,057,484 ā ā ā ā ā 135,057,484 ā ā 133,417,272 ā ā ā ā ā 133,417,272 Accumulated deficit ā ā (60,115,614) ā ā ā ā ā (60,115,614) ā ā (53,522,078) ā ā ā ā ā (53,522,078) Accumulated other comprehensive income ā ā 6,660,827 ā ā ā ā ā 6,660,827 ā ā 6,430,567 ā ā ā ā ā 6,430,567 Total Midwest Holding Inc.'s stockholders' equity ā $ 81,606,435 ā $ ā ā $ 81,606,435 ā $ 86,329,499 ā $ ā ā $ 86,329,499 Total liabilities and stockholders' equity ā $ 438,346,524 ā $ 549,129,264 ā $ 987,475,788 ā $ 305,799,591 ā $ 420,601,168 ā $ 726,400,759 |
Long-Term Incentive Plan (Table
Long-Term Incentive Plan (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of remaining non-vested shares | The table below shows the remaining non-vested shares under the 2019 and 2020 Plans: ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 ā Stock Options/ (1) ā Stock Options (1) Beginning balance ā 100,972 ā 17,900 Options granted under the 2019 Plan ā ā ā 68,025 Options granted under the 2020 Plan ā 174,502 ā ā Restricted stock granted under the 2019 Plan ā ā ā 18,597 Forfeited ā (11,700) ā (3,350) Vested ā (4,650) ā (200) Ending Balance 259,124 ā 100,972 ā (1) Reflects reverse stock split of 500 :1 as of August 27, 2020. |
Deposit-Type Contracts (Tables)
Deposit-Type Contracts (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Deposit Type Contracts [Abstract] | |
Schedule of deposit-type contracts | ā ā ā ā ā ā ā ā ā June 30, 2021 December 31, 2020 Beginning balance ā $ 597,868,472 ā $ 171,168,785 US Alliance ā 779,257 ā (3,307,587) Ironbound Reinsurance Company Limited ā 3,110,313 ā 6,080,196 SDA Annuity & Life Re (includes MVA adjustment and embedded derivative) ā ā 1,219,703 ā ā 3,053,160 Crestline SP1 ā ā 703,681 ā ā 3,606,833 American Republic Insurance Company ā ā 239,223 ā ā ā Deposits received ā 249,519,268 ā 415,561,302 Investment earnings (includes embedded derivative) ā 1,584,814 ā 4,214,828 Withdrawals ā (6,309,735) ā (2,509,045) Ending balance ā $ 848,714,996 ā $ 597,868,472 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information as of June 30, 2021 and December 31, 2020, are as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā As of ā As of Leases Classification June 30, 2021 December 31, 2020 Assets ā ā Operating Operating lease right-of-use assets ā $ 287,660 ā $ 348,198 ā ā ā ā ā ā ā ā ā Liabilities ā ā Operating lease Operating lease liabilities ā $ 331,350 ā $ 396,911 |
Schedule of Components of Lease Expenses | Our operating and finance leases expenses for the three and six months ended June 30, 2021 and 2020, were as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, Leases Classification 2021 2020 2021 2020 Operating General and administrative expense ā $ 383 ā $ 2,485 ā $ 1,616 ā $ 4,577 ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Finance lease cost: ā ā ā ā ā Amortization expense ā ā ā ā ā ā ā 2,913 ā Interest expense ā ā ā ā ā ā ā 111 |
Schedule of Finance and Operating Leases Minimum | Minimum contractual obligations for our operating leases at June 30, 2021, are as follows: ā ā ā ā ā ā Operating Leases 2021 (excluding six months ended June 30, 2021) ā $ 81,766 2022 ā 156,608 2023 ā 161,674 2024 ā 13,508 Total remaining lease payments ā $ 413,556 |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended June 30, ā Six months ended June 30, ā 2021 2020 2021 2020 Cash payments ā ā ā ā Operating cash flows from operating leases ā $ (2,723) ā $ (190) ā $ (5,023) ā $ (1,035) Operating cash flows from finance leases ā ā ā 1,164 ā ā ā 4,657 Financing cash flows from finance leases ā ā ā ā ā ā ā (111) |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Summary of Balance of and Changes in Each Component of AOCI | ā ā ā ā ā ā ā ā ā ā ā Unrealized Unrealized Accumulated other Balance at December 31, 2019 $ 473,399 ā $ 146,185 ā $ 619,584 Other comprehensive income before Reclassifications 7,398,432 ā ā ā ā 7,398,432 Unrealized gains on foreign currency ā ā ā ā (146,185) ā ā (146,185) Less: Reclassification adjustments for losses realized in net income ā (1,441,264) ā ā ā ā ā (1,441,264) Balance at December 31, 2020 ā 6,430,567 ā ā ā ā ā 6,430,567 Other comprehensive income (loss) before reclassifications, net of tax ā 1,336,272 ā ā ā ā ā 1,336,272 Less: Reclassification adjustments for losses realized in net income, net of tax ā (1,106,012) ā ā ā ā ā (1,106,012) Balance at June 30, 2021 $ 6,660,827 ā $ ā ā $ 6,660,827 |
Deferred Acquisition Costs (Tab
Deferred Acquisition Costs (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Deferred Acquisition Costs | |
Schedule of Deferred Acquisition Costs | ā ā ā ā ā ā ā ā ā June 30, 2021 ā December 31, 2020 Beginning balance ā $ 13,456,303 ā $ ā Additions ā ā 8,867,230 ā ā 13,919,206 Amortization ā ā (1,027,073) ā ā (670,233) Interest ā ā 187,926 ā ā 138,295 Impact of unrealized investment losses ā ā (65,141) ā ā 69,035 Ending Balance ā $ 21,419,245 ā $ 13,456,303 |
Nature of Operations and Basi_3
Nature of Operations and Basis of Presentation (Narrative) (Details) | Dec. 16, 2020USD ($) | Nov. 03, 2020USD ($) | Sep. 28, 2020USD ($) | Jun. 15, 2020USD ($) | Apr. 24, 2020USD ($)$ / sharesshares | Mar. 30, 2020USD ($) | Dec. 31, 2020USD ($)leasesecurity$ / shares | Jun. 30, 2021USD ($)$ / sharesshares | Mar. 31, 2021USD ($)item | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2021USD ($)segment$ / sharesshares | Jun. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2020USD ($)leasesecuritysegmentproductplan$ / shares | Jun. 30, 2021GBP (Ā£) | Jun. 30, 2021EUR (ā¬) | Jan. 31, 2021 | Dec. 31, 2020GBP (Ā£)leasesecurity | Dec. 31, 2020EUR (ā¬)leasesecurity | Aug. 10, 2020$ / shares | Apr. 02, 2019 |
Shares issued | shares | 231,655 | |||||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||
Share Price | $ / shares | $ 22.50 | |||||||||||||||||||
Proceeds from issuance of common shares | $ 5,227,000 | |||||||||||||||||||
Proceeds from IPO | $ 70,000,000 | |||||||||||||||||||
Number of reporting segment | segment | 1 | |||||||||||||||||||
Number of Products | segment | 5 | |||||||||||||||||||
Number of Bonus Plans | plan | 2 | |||||||||||||||||||
Valuation allowances on mortgage loans | 0 | $ 0 | $ 0 | $ 0 | ||||||||||||||||
Equity securities | 46,924,170 | 46,924,170 | ||||||||||||||||||
Escrow Deposit | 3,174,047 | 0 | 0 | 3,174,047 | ||||||||||||||||
Fund investments | $ 3,900,000 | $ 15,800,000 | 32,291,974 | $ 7,011,102 | ||||||||||||||||
Other investments in fund | 19,700,000 | 19,700,000 | ||||||||||||||||||
Gain or loss on investment | 0 | |||||||||||||||||||
Other invested assets | $ 21,897,130 | 40,813,176 | 40,813,176 | 21,897,130 | ||||||||||||||||
Impairment allowance on investment | 0 | $ 35,000 | ||||||||||||||||||
Number of securities | security | 1 | 1 | 1 | 1 | ||||||||||||||||
Valuation Allowance on Leased Asset | $ 776,973 | $ 776,973 | 776,973 | $ 776,973 | ||||||||||||||||
Number of leases, valuation allowance | lease | 1 | 1 | 1 | 1 | ||||||||||||||||
Impairment on preferred stock | $ 500,000 | |||||||||||||||||||
Notes receivable | $ 5,665,487 | 5,810,328 | $ 5,810,328 | 5,665,487 | ||||||||||||||||
Notes receivable maturity term | 50 years | |||||||||||||||||||
Valuation allowance on policy loans | 0 | $ 0 | ||||||||||||||||||
Realized gains (losses) on foreign exchange translation | (65,000) | 45,000 | ||||||||||||||||||
Money market investments | 100,600,000 | 42,800,000 | 42,800,000 | 100,600,000 | ||||||||||||||||
Depreciation | 11,837 | 11,996 | 24,172 | 22,312 | ||||||||||||||||
Accumulated depreciation | 1,023,334 | 1,047,505 | 1,047,505 | 1,023,334 | ||||||||||||||||
Reinsurance recoverables on unpaid losses, allowance | 0 | 0 | 0 | 0 | ||||||||||||||||
Unrealized gains | 3,300,000 | 2,900,000 | ||||||||||||||||||
Embedded derivative losses | 2,900,000 | |||||||||||||||||||
Embedded derivative losses | 440,000 | |||||||||||||||||||
Unrealized gains on investments, net of taxes | $ (411,546) | $ 19,493,534 | $ 230,260 | $ (7,277,449) | ||||||||||||||||
Basic earnings per share | $ / shares | $ (1.34) | $ (6.53) | $ (1.76) | $ 2.19 | ||||||||||||||||
Weighted Average Number of Shares Outstanding, Basic (in shares) | shares | 3,737,564 | 2,540,588 | 3,737,564 | 2,291,629 | ||||||||||||||||
Weighted average number of shares outstanding, Diluted (in shares) | shares | 3,737,564 | 2,540,588 | 3,737,564 | 2,291,629 | ||||||||||||||||
BBB+ | ||||||||||||||||||||
Interest rate | 5.00% | 5.00% | 5.00% | 5.00% | ||||||||||||||||
Ascona Group Holdings Ltd | ||||||||||||||||||||
Preferred equity | $ 3,642,090 | |||||||||||||||||||
Market value | 3,900,000 | $ 4,700,000 | $ 4,700,000 | 3,900,000 | ||||||||||||||||
Warrants market value | 0 | 0 | ||||||||||||||||||
PF Collinwood Holdings LLC | ||||||||||||||||||||
Other invested assets | 16,900,000 | 16,900,000 | ||||||||||||||||||
United Kingdom, Pounds | ||||||||||||||||||||
Cash held in custody accounts | 690,787 | 1,170,660 | 1,170,660 | 690,787 | Ā£ 963,930 | Ā£ 505,349 | ||||||||||||||
Euro Member Countries, Euro | ||||||||||||||||||||
Cash held in custody accounts | $ 107,000 | 736,000 | 736,000 | 107,000 | ā¬ 620,750 | ā¬ 87,633 | ||||||||||||||
Enterprise resource planning and Enterprise performance management | ||||||||||||||||||||
Capitalized consultation and support expenses | $ 505,000 | |||||||||||||||||||
Number of vendors | item | 2 | |||||||||||||||||||
Useful life of intangible assets | 5 years | |||||||||||||||||||
Capitalized software | 384,000 | $ 384,000 | ||||||||||||||||||
Finite-Lived Intangible Assets, Remaining Amortization Period | 5 years | |||||||||||||||||||
Furniture and Fixtures [Member] | Minimum | ||||||||||||||||||||
Useful life | 3 years | |||||||||||||||||||
Furniture and Fixtures [Member] | Maximum | ||||||||||||||||||||
Useful life | 7 years | |||||||||||||||||||
Enterprise resource planning and Enterprise performance management | ||||||||||||||||||||
Useful life | 3 years | |||||||||||||||||||
Voting common share | ||||||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | |||||||||||||||||||
Non-voting common shares | ||||||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | |||||||||||||||||||
SRC1 | ||||||||||||||||||||
Embedded derivative gains | $ 8,500,000 | |||||||||||||||||||
Embedded derivative losses | $ 843,000 | $ 14,800,000 | ||||||||||||||||||
Embedded derivative losses | $ 440,000 | |||||||||||||||||||
Unrealized gains on investments, net of taxes | $ 5,000,000 | $ 5,100,000 | ||||||||||||||||||
Basic earnings per share | $ / shares | $ (1.34) | $ (6.53) | $ (1.76) | $ 2.19 | ||||||||||||||||
Basic Earnings Per Share, Excluding Embedded Derivative Gain | $ / shares | $ (1.10) | $ (0.69) | $ (1.88) | $ (1.04) | ||||||||||||||||
Crestline Assurance Holdings LLC | Securities Purchase Agreement | ||||||||||||||||||||
Shares issued | shares | 444,444 | |||||||||||||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | |||||||||||||||||||
Share Price | $ / shares | $ 22.50 | |||||||||||||||||||
Proceeds from issuance of common shares | $ 10,000,000 | |||||||||||||||||||
Multi Year Guaranteed Annuity | ||||||||||||||||||||
Number of Products | product | 2 | |||||||||||||||||||
Multi Year Guaranteed Annuity | Crestline Assurance Holdings LLC | Master Letter Agreement | ||||||||||||||||||||
Percentage of indemnity coinsurance | 25.00% | |||||||||||||||||||
Fixed Index Annuity | Crestline Assurance Holdings LLC | Master Letter Agreement | ||||||||||||||||||||
Percentage of indemnity coinsurance | 40.00% | |||||||||||||||||||
Exchange Traded Funds | ||||||||||||||||||||
Equity securities | $ 46,900,000 | $ 46,900,000 | ||||||||||||||||||
1505 Capital LLC | ||||||||||||||||||||
Business Combination, Consideration Transferred | $ 500,000 | |||||||||||||||||||
American Life [Member] | PF Collinwood Holdings LLC | ||||||||||||||||||||
Ownership (as a percent) | 100.00% | |||||||||||||||||||
American Life [Member] | Crestline Assurance Holdings LLC | ||||||||||||||||||||
Capital contribution | $ 5,000,000 | |||||||||||||||||||
Investment Manager | ||||||||||||||||||||
Other investments in fund | 11,000,000 | 11,000,000 | ||||||||||||||||||
Other invested assets | $ 13,200,000 | $ 13,200,000 | ||||||||||||||||||
1505 Capital LLC | ||||||||||||||||||||
Ownership percentage acquired | 49.00% | 49.00% | 49.00% | 51.00% | ||||||||||||||||
American Life [Member] | Ascona Group Holdings Ltd | ||||||||||||||||||||
Ownership interest | 74.00% | 74.00% | 74.00% | 74.00% | ||||||||||||||||
Seneca Reinsurance Company, LLC | ||||||||||||||||||||
Contributions made | $ 300,000 | |||||||||||||||||||
Ownership percentage acquired | 100.00% | |||||||||||||||||||
Crestline Assurance Holdings LLC | Ascona Group Holdings Ltd | ||||||||||||||||||||
Ownership interest | 26.00% | 26.00% | 26.00% | 26.00% |
Assets and Liabilities Associ_3
Assets and Liabilities Associated with Business Held for Sale (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |||||
Percentage of indemnity reinsurance basis of liabilities and obligations | 100.00% | ||||
Ceding commission | $ 3,500,000 | ||||
Percentage of indemnity policies | 90.00% | 89.00% | |||
Ceding Commission amortized | $ 12,348 | $ 211,436 | $ 19,976 | $ 278,886 |
Assets and Liabilities Associ_4
Assets and Liabilities Associated with Business Held for Sale (Schedule of Assets and Liabilities Discontinued Operations) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Carrying amounts of major classes of assets included as part of discontinued operations: | ||
Policy loans | $ 24,985 | $ 33,161 |
Reinsurance recoverables | 1,014,680 | 1,061,979 |
Premiums receivable | 18,515 | 23,643 |
Total assets held for sale in the Consolidated Balance Sheets | 1,058,180 | 1,118,783 |
Carrying amounts of major classes of liabilities included as part of discontinued operations: | ||
Benefit reserves | 563,218 | 594,710 |
Policy claims | 36,747 | 35,302 |
Deposit-type contracts | 451,899 | 482,966 |
Advance premiums | 159 | 71 |
Accounts payable and accrued expenses | 1,203 | 1,263 |
Total liabilities held for sale in the Consolidated Balance Sheets | $ 1,053,226 | $ 1,114,312 |
Non-controlling Interest (Detai
Non-controlling Interest (Details) - USD ($) | Jun. 15, 2020 | Apr. 02, 2019 | Jun. 30, 2020 |
1505 Capital LLC | |||
Noncontrolling Interest [Line Items] | |||
Business Combination, Consideration Transferred | $ 500,000 | ||
1505 Capital LLC | |||
Noncontrolling Interest [Line Items] | |||
Ownership percentage acquired | 49.00% | 51.00% | 49.00% |
Capital units acquired, purchase price | $ 1,000,000 |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost and Estimated Fair Value of Investments) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Amortized Cost | $ 580,914,162 | $ 369,156,068 |
Total fixed maturities | 588,861,261 | 377,163,358 |
Mortgage loans on real estate, held for investment | 130,372,068 | 94,989,970 |
Derivatives, Cost | 12,913,546 | 8,532,252 |
Derivatives, Gross Unrealized Gains | 4,992,636 | 3,257,069 |
Derivatives, Gross Unrealized Losses | 1,483,788 | 428,287 |
Estimated Fair Value | 16,422,394 | 11,361,034 |
Equity securities, at fair value (cost: $46,887,832 in 2021 and zero in 2020) | 46,924,170 | |
Federal Home Loan Bank (FHLB) stock | 500,000 | |
Other invested assets, Cost | 40,490,291 | |
Other invested assets, Gross Unrealized Gains | 1,591,080 | |
Other invested assets, Gross Unrealized Losses | 1,268,195 | |
Other invested assets | 40,813,176 | 21,897,130 |
Investment escrow | 0 | 3,174,047 |
Notes receivable | 5,810,328 | 5,665,487 |
Policy Loans | 51,529 | 45,573 |
Total investments, Amortized Cost | 771,051,924 | 503,460,527 |
Investments, Gross Unrealized Gains | 16,474,584 | 11,948,773 |
Investments, Gross Unrealized Losses | 4,695,752 | 1,112,701 |
Investments, Fair Value Disclosure | 834,483,301 | 518,194,579 |
Estimated Fair Value | 782,830,756 | 514,296,599 |
Fixed Maturities | ||
Amortized Cost | 580,914,162 | 369,156,068 |
Gross Unrealized Gains | 9,890,868 | 8,691,704 |
Gross Unrealized Losses | 1,943,769 | 684,414 |
Total fixed maturities | 588,861,261 | 377,163,358 |
U.S. government obligations | Fixed Maturities | ||
Amortized Cost | 1,946,573 | 5,744,221 |
Gross Unrealized Gains | 60,537 | 426,427 |
Gross Unrealized Losses | 3,976 | 5,665 |
Total fixed maturities | 2,003,134 | 6,164,983 |
Mortgage-back securities | Fixed Maturities | ||
Amortized Cost | 40,399,566 | 14,638,299 |
Gross Unrealized Gains | 896,057 | 276,219 |
Gross Unrealized Losses | 6,208 | 157,104 |
Total fixed maturities | 41,289,415 | 14,757,414 |
Collateralized loan obligations | Fixed Maturities | ||
Amortized Cost | 319,085,884 | |
Gross Unrealized Gains | 5,352,514 | |
Gross Unrealized Losses | 340,837 | |
Total fixed maturities | 324,097,561 | 221,773,609 |
Asset-backed securities | Fixed Maturities | ||
Amortized Cost | 216,500,672 | |
Gross Unrealized Gains | 5,623,083 | |
Gross Unrealized Losses | 350,146 | |
Total fixed maturities | 221,773,609 | |
States and Political Subdivisions - general obligations | Fixed Maturities | ||
Amortized Cost | 105,923 | 106,528 |
Gross Unrealized Gains | 12,261 | 10,802 |
Total fixed maturities | 118,184 | 117,330 |
States and Political Subdivisions - special revenue | Fixed Maturities | ||
Amortized Cost | 5,417,397 | 5,293,365 |
Gross Unrealized Gains | 1,112,529 | 908,986 |
Gross Unrealized Losses | 3,800 | 147 |
Total fixed maturities | 6,526,126 | 6,202,204 |
Trust preferred | Fixed Maturities | ||
Amortized Cost | 16,291,342 | 2,218,142 |
Gross Unrealized Gains | 200,973 | 66,674 |
Gross Unrealized Losses | 26,400 | |
Total fixed maturities | 16,465,915 | 2,284,816 |
Corporate | Fixed Maturities | ||
Amortized Cost | 197,667,477 | 124,654,841 |
Gross Unrealized Gains | 2,255,997 | 1,379,513 |
Gross Unrealized Losses | 1,562,548 | 171,352 |
Total fixed maturities | $ 198,360,926 | $ 125,863,002 |
Investments (Schedule of Credit
Investments (Schedule of Credit Ratings of Fixed Maturity Securities) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Marketable Securities [Line Items] | ||
Total fixed maturities | $ 588,861,261 | $ 377,163,358 |
Fixed Maturities | ||
Marketable Securities [Line Items] | ||
Total fixed maturities | $ 588,861,261 | $ 377,163,358 |
Percent | 100.00% | 100.00% |
Fixed Maturities | Investment grade | ||
Marketable Securities [Line Items] | ||
Total fixed maturities | $ 520,783,609 | $ 305,969,909 |
Percent | 88.40% | 81.10% |
Fixed Maturities | Investment grade | AAA and U.S. Government | ||
Marketable Securities [Line Items] | ||
Total fixed maturities | $ 19,761,963 | $ 3,070,750 |
Percent | 3.40% | 0.80% |
Fixed Maturities | Investment grade | AA | ||
Marketable Securities [Line Items] | ||
Total fixed maturities | $ 652,443 | $ 5,818,163 |
Percent | 0.10% | 1.50% |
Fixed Maturities | Investment grade | A | ||
Marketable Securities [Line Items] | ||
Total fixed maturities | $ 105,264,686 | $ 49,445,266 |
Percent | 17.90% | 13.10% |
Fixed Maturities | Investment grade | BBB | ||
Marketable Securities [Line Items] | ||
Total fixed maturities | $ 395,104,517 | $ 247,635,730 |
Percent | 67.00% | 65.70% |
Fixed Maturities | Non investment grade | BB and other | ||
Marketable Securities [Line Items] | ||
Total fixed maturities | $ 68,077,652 | $ 71,193,449 |
Percent | 11.60% | 18.90% |
Investments (Schedule of Unreal
Investments (Schedule of Unrealized Loss of Securities) (Details) - Fixed Maturities | Jun. 30, 2021USD ($)security | Dec. 31, 2020USD ($)security |
Estimated Fair Value, Total | $ 132,623,924 | $ 31,933,749 |
Gross Unrealized Loss, Total | $ 1,943,769 | $ 684,414 |
Number of Securities, Total | security | 124 | 47 |
U.S. government obligations | ||
Estimated Fair Value, Less than 12 months | $ 13,087 | $ 54,910 |
Gross Unrealized Loss, Less than 12 months | $ 1,079 | $ 180 |
Number of Securities, Less than 12 months | security | 6 | 2 |
Estimated Fair value, Greater than 12 months | $ 74,180 | $ 119,700 |
Gross Unrealized Loss, Greater than 12 months | $ 2,897 | $ 5,485 |
Number of Securities, Greater than 12 months | security | 3 | 4 |
Mortgage-back securities | ||
Estimated Fair Value, Less than 12 months | $ 1,089,454 | $ 5,707,617 |
Gross Unrealized Loss, Less than 12 months | $ 6,208 | $ 157,104 |
Number of Securities, Less than 12 months | security | 2 | 5 |
Collateralized loan obligations | ||
Estimated Fair Value, Less than 12 months | $ 51,350,944 | $ 14,878,370 |
Gross Unrealized Loss, Less than 12 months | $ 337,107 | $ 246,969 |
Number of Securities, Less than 12 months | security | 59 | 19 |
Estimated Fair value, Greater than 12 months | $ 496,269 | $ 7,020,479 |
Gross Unrealized Loss, Greater than 12 months | $ 3,730 | $ 103,177 |
Number of Securities, Greater than 12 months | security | 1 | 6 |
States and Political Subdivisions - special revenue | ||
Estimated Fair Value, Less than 12 months | $ 532,613 | $ 5,584 |
Gross Unrealized Loss, Less than 12 months | $ 3,800 | $ 147 |
Number of Securities, Less than 12 months | security | 4 | 1 |
Trust preferred | ||
Estimated Fair Value, Less than 12 months | $ 3,073,200 | |
Gross Unrealized Loss, Less than 12 months | $ 26,400 | |
Number of Securities, Less than 12 months | security | 1 | |
Corporate | ||
Estimated Fair Value, Less than 12 months | $ 75,670,436 | $ 3,859,616 |
Gross Unrealized Loss, Less than 12 months | $ 1,533,987 | $ 104,262 |
Number of Securities, Less than 12 months | security | 45 | 7 |
Estimated Fair value, Greater than 12 months | $ 323,741 | $ 287,473 |
Gross Unrealized Loss, Greater than 12 months | $ 28,561 | $ 67,090 |
Number of Securities, Greater than 12 months | security | 3 | 3 |
Investments (Schedule of Fixed
Investments (Schedule of Fixed Maturities) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Marketable Securities [Abstract] | ||
Amortized Cost, Due in one year or less | $ 20,656,659 | |
Amortized Cost, Due after one year through five years | 136,423,479 | |
Amortized Cost, Due after five years through ten years | 150,814,326 | |
Amortized Cost, Due after ten years through twenty years | 214,535,543 | |
Amortized Cost, Due after twenty years | 58,484,155 | |
Amortized Cost | 580,914,162 | $ 369,156,068 |
Estimated Fair Value, Due in one year or less | 20,667,447 | |
Estimated Fair Value, Due after one year through five years | 135,997,644 | |
Estimated Fair Value, Due after five years through ten years | 153,866,190 | |
Estimated Fair Value, Due after ten years through twenty years | 217,549,784 | |
Estimated Fair Value, Due after twenty years | 60,780,196 | |
(amortized cost: $580,914,162,962 and $369,156,068, respectively) (See Note 4) | $ 588,861,261 | $ 377,163,358 |
Investments (Schedule of Invest
Investments (Schedule of Investments Measured at Fair Value on a Recurring Basis) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Carrying Value | $ 130,372,068 | $ 94,989,970 |
Industrial | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Carrying Value | 1,250,000 | |
Commercial mortgage loan - multi-family | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Carrying Value | 62,824,086 | 66,916,151 |
Other. | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Carrying Value | 67,547,982 | 26,823,819 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Carrying Value | $ 130,372,068 | $ 94,989,970 |
Investments (Schedule of Mortga
Investments (Schedule of Mortgage Loan Investments) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Mortgage loans on real estate, held for investment | $ 130,372,068 | $ 94,989,970 |
0%-59.99% | ||
Mortgage loans on real estate, held for investment | 108,636,962 | 49,279,601 |
60%-69.99% | ||
Mortgage loans on real estate, held for investment | 17,904,153 | 22,349,295 |
70%-79.99% | ||
Mortgage loans on real estate, held for investment | $ 3,830,953 | $ 23,361,074 |
Investments (Components of Net
Investments (Components of Net Investment Income) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Net investment income | $ 4,632,479 | $ (128,209) | $ 7,912,848 | $ 1,041,929 |
Less: investment (expenses) refund | (1,412,453) | (269,633) | (1,805,459) | (198,793) |
Investment income, net of expenses | 3,220,026 | (397,842) | 6,107,389 | 843,136 |
Fixed Maturities | ||||
Net investment income | 4,088,461 | $ (128,209) | 7,068,321 | $ 1,041,929 |
Mortgage loans | ||||
Net investment income | 366,717 | 540,495 | ||
Other invested assets | ||||
Net investment income | 96,054 | 151,867 | ||
Other interest income | ||||
Net investment income | $ 81,247 | $ 152,165 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Impairment on fixed maturities | $ 0 | $ 35,000 | ||||
Outstanding remaining lease payments | $ 3,600,000 | $ 3,600,000 | ||||
Valuation allowance on leased assets | 776,973 | 776,973 | 776,973 | |||
Loss on sale of non-performing asset | $ (2,400,000) | |||||
Amortized cost | $ 3,412,383 | 3,412,383 | 3,406,950 | |||
Fair value | 3,529,882 | 3,529,882 | $ 3,598,352 | |||
Proceeds from sales of available-for-sale investments | 70,920,784 | 14,556,095 | 132,752,125 | 18,409,038 | ||
Gross realized gain | 1,280,793 | 1,038,822 | 1,853,600 | 1,188,370 | ||
Gross realized losses | $ 287,195 | $ 6,575 | $ 453,581 | $ 31,407 | ||
Mortgage Loans Secured by Property | Delaware | Geographic Concentration Risk [Member] | ||||||
Concentration risk percentage | 31.00% | |||||
Mortgage Loans Secured by Property | New York | Geographic Concentration Risk [Member] | ||||||
Concentration risk percentage | 22.00% | 28.00% | ||||
Mortgage Loans Secured by Property | Pennsylvania | Geographic Concentration Risk [Member] | ||||||
Concentration risk percentage | 9.00% | 14.00% | ||||
Mortgage Loans Secured by Property | Arizona | Geographic Concentration Risk [Member] | ||||||
Concentration risk percentage | 7.00% | |||||
Mortgage Loans Secured by Property | California | Geographic Concentration Risk [Member] | ||||||
Concentration risk percentage | 6.00% | 14.00% | ||||
Mortgage Loans Secured by Property | Europe | Geographic Concentration Risk [Member] | ||||||
Concentration risk percentage | 10.00% | 12.00% |
Derivative Instruments (Details
Derivative Instruments (Details) | Jun. 30, 2021USD ($)contract | Dec. 31, 2020USD ($)contract |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Estimated Fair Value | $ 16,422,394 | $ 11,361,034 |
Derivatives not designated as hedge | Equity options | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional Amount | $ 448,486,517 | $ 272,853,853 |
Number of Contracts | contract | 399 | 252 |
Estimated Fair Value | $ 15,012,157 | $ 11,361,034 |
Derivatives not designated as hedge | Equity-indexed embedded derivative | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional Amount | $ 442,680,823 | $ 311,964,195 |
Number of Contracts | contract | 3,401 | 2,101 |
Estimated Fair Value | $ 100,561,244 | $ 84,501,492 |
Derivative Instruments - Funds
Derivative Instruments - Funds Withheld Provision (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Total return swap value | $ (2,900,000) | |
Increase (decrease) in realized loss | $ 440,000 | |
Reinsurance recoverables | 45,237,046 | 32,146,042 |
American Republic Insurance Company | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Reinsurance recoverables | 5,994,880 | |
Crestline SP 1 | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Reinsurance recoverables | 17,495,505 | 9,695,427 |
SDA Annuity and Life Re | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Reinsurance recoverables | 4,331,106 | 3,540,697 |
US Alliance Life and Security Company [Member] | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Reinsurance recoverables | 7,736,774 | 7,235,309 |
Funds With held Provision Agreement | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Book value of assets | 280,031,852 | 223,808,408 |
Market value of assets | 283,380,755 | 226,719,016 |
Total return swap value | (3,348,903) | (2,910,608) |
Funds With held Provision Agreement | American Republic Insurance Company | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Book value of assets | 28,157,500 | |
Market value of assets | 28,200,539 | |
Total return swap value | (43,039) | |
Funds With held Provision Agreement | Crestline SP 1 | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Book value of assets | 77,675,300 | 62,162,766 |
Market value of assets | 79,279,242 | 63,130,867 |
Total return swap value | (1,603,942) | (968,101) |
Funds With held Provision Agreement | Ironbound Reinsurance Company Limited | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Book value of assets | 105,981,525 | 98,714,156 |
Market value of assets | 107,398,336 | 99,747,812 |
Total return swap value | (1,416,811) | (1,033,656) |
Funds With held Provision Agreement | SDA Annuity and Life Re | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Book value of assets | 30,075,323 | 27,224,279 |
Market value of assets | 30,139,665 | 27,479,836 |
Total return swap value | (64,342) | (255,557) |
Funds With held Provision Agreement | US Alliance Agreement | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Book value of assets | 38,142,204 | 35,707,207 |
Market value of assets | 38,362,973 | 36,360,501 |
Total return swap value | $ (220,769) | $ (653,294) |
Fair Values of Financial Inst_3
Fair Values of Financial Instruments (Schedule of Financial Instruments at Fair Value Measured on a Recurring Basis) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | $ 588,861,261 | $ 377,163,358 |
Mortgage loans on real estate, held for investment | 130,372,068 | 94,989,970 |
Derivative instruments (See Note 5) | 16,422,394 | 11,361,034 |
Equity securities | 46,924,170 | |
Other invested assets | 40,813,176 | 21,897,130 |
Federal Home Loan Bank (FHLB) stock | 500,000 | |
Investment escrow | 0 | 3,174,047 |
Preferred stock | 4,728,375 | 3,897,980 |
Notes receivable | 5,810,328 | 5,665,487 |
Policy loans | 51,529 | 45,573 |
Total Investments | 834,483,301 | 518,194,579 |
Embedded derivative for equity-indexed contracts | 100,561,244 | 84,501,492 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative instruments (See Note 5) | 16,422,394 | 11,361,034 |
Equity securities | 46,924,170 | |
Investment escrow | 3,174,047 | |
Notes receivable | 5,810,328 | 5,665,487 |
Total Investments | 493,769,307 | 290,109,919 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage loans on real estate, held for investment | 130,372,068 | 94,989,970 |
Other invested assets | 40,813,176 | 21,897,130 |
Federal Home Loan Bank (FHLB) stock | 500,000 | |
Preferred stock | 4,728,375 | 3,897,980 |
Policy loans | 51,529 | 45,573 |
Total Investments | 340,713,994 | 228,084,660 |
Embedded derivative for equity-indexed contracts | 100,561,244 | 84,501,492 |
Fixed Maturities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 588,861,261 | 377,163,358 |
Fixed Maturities | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 424,612,415 | 269,909,351 |
Fixed Maturities | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 164,248,846 | 107,254,007 |
Fixed Maturities | U.S. government obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 2,003,134 | 6,164,983 |
Fixed Maturities | U.S. government obligations | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 2,003,134 | 6,164,983 |
Fixed Maturities | Mortgage-back securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 41,289,415 | 14,757,414 |
Fixed Maturities | Mortgage-back securities | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 41,289,415 | 14,757,414 |
Fixed Maturities | Collateralized loan obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 324,097,561 | 221,773,609 |
Fixed Maturities | Collateralized loan obligations | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 324,097,561 | 221,773,609 |
Fixed Maturities | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 221,773,609 | |
Fixed Maturities | States and Political Subdivisions - general obligations | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 118,184 | 117,330 |
Fixed Maturities | States and Political Subdivisions - general obligations | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 118,184 | 117,330 |
Fixed Maturities | States and Political Subdivisions - special revenue | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 6,526,126 | 6,202,204 |
Fixed Maturities | States and Political Subdivisions - special revenue | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 6,526,126 | 6,202,204 |
Fixed Maturities | Trust preferred | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 16,465,915 | 2,284,816 |
Fixed Maturities | Trust preferred | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 16,465,915 | 2,284,816 |
Fixed Maturities | Corporate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 198,360,926 | 125,863,002 |
Fixed Maturities | Corporate | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | 34,112,080 | 18,608,995 |
Fixed Maturities | Corporate | Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | $ 164,248,846 | $ 107,254,007 |
Fair Values of Financial Inst_4
Fair Values of Financial Instruments (Schedule of Financial Assets and Liabilities at Fair Value) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Assets: | ||
Cash | $ 70,278,979 | $ 151,679,274 |
Fair Value, Inputs, Level 1 | ||
Assets: | ||
Cash | 61,217,719 | 100,566,580 |
Fair Value, Inputs, Level 2 | ||
Assets: | ||
Cash | 9,061,260 | 51,112,694 |
Fair Value, Inputs, Level 3 | ||
Assets: | ||
Policy loans | 51,529 | 45,573 |
Liabilities: | ||
Policyholder deposits (Deposit-type contracts) | 848,714,996 | 597,868,472 |
Carrying Amount | ||
Assets: | ||
Policy loans | 51,529 | 45,573 |
Cash | 70,278,979 | 151,679,274 |
Liabilities: | ||
Policyholder deposits (Deposit-type contracts) | 848,714,996 | 597,868,472 |
Fair Value | ||
Assets: | ||
Policy loans | 51,529 | 45,573 |
Cash | 70,278,979 | 151,679,274 |
Liabilities: | ||
Policyholder deposits (Deposit-type contracts) | $ 848,714,996 | $ 597,868,472 |
Fair Values of Financial Inst_5
Fair Values of Financial Instruments (Recurring Basis Level 3) (Details) - Fair Value, Inputs, Level 3 - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Beginning Balance | $ 228,039,087 | $ 16,778,988 |
Additions | 193,050,772 | 285,231,136 |
Sales | 80,427,394 | 72,694,064 |
Valuation Allowance | (776,973) | |
Impairment | (500,000) | |
Ending Balance | 340,662,465 | 228,039,087 |
Fixed Maturities | ||
Beginning Balance | 107,254,007 | |
Additions | 103,910,243 | 107,254,007 |
Sales | 46,915,404 | |
Ending Balance | 164,248,846 | 107,254,007 |
Mortgage loans on real estate, held for investment | ||
Beginning Balance | 94,989,970 | 13,810,041 |
Additions | 51,978,684 | 99,356,435 |
Sales | 16,596,586 | 18,176,506 |
Ending Balance | 130,372,068 | 94,989,970 |
Federal Home Loan Bank (FHLB) stock | ||
Additions | 500,000 | |
Ending Balance | 500,000 | |
Other invested assets | ||
Beginning Balance | 21,897,130 | 2,468,947 |
Additions | 35,831,450 | 74,722,714 |
Sales | 16,915,404 | 54,517,558 |
Valuation Allowance | (776,973) | |
Ending Balance | 40,813,176 | 21,897,130 |
Preferred Stock | ||
Beginning Balance | 3,897,980 | 500,000 |
Additions | 830,395 | 3,897,980 |
Impairment | (500,000) | |
Ending Balance | $ 4,728,375 | $ 3,897,980 |
Fair Values of Financial Inst_6
Fair Values of Financial Instruments (summary of unobservable inputs) (Details) - Fair Value, Inputs, Level 3 $ in Millions | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) |
Non performance risk | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total fixed maturities | $ 100.6 | $ 84.5 |
Embedded Derivative Liability, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueOptionPricingModelMember | us-gaap:ValuationTechniqueOptionPricingModelMember |
Non performance risk | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 0.2 | 0.3 |
Non performance risk | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 1.1 | 1.3 |
Non performance risk | Weighted average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 0.6 | 0.7 |
Option budget | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 1.1 | 2.6 |
Option budget | Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 3.4 | 3.4 |
Option budget | Weighted average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 2.4 | 2.7 |
Surrender rate | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 0.5 | 0.5 |
Surrender rate | Maximum | Base | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 15 | 15 |
Surrender rate | Maximum | Additional Shock | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 30 | 30 |
Surrender rate | Weighted average | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest sensitive contract liabilities, embedded derivative (as a percent) | 7.4 | 7.6 |
Fair Values of Financial Inst_7
Fair Values of Financial Instruments (Narrative) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Investment escrow | $ 0 | $ 3,174,047 |
Notes receivable | 5,810,328 | 5,665,487 |
Equity securities | 46,924,170 | |
Fair value of assets from Level 1 to Level 2 | 0 | |
Fair value of assets from Level 2 to Level 1 | 0 | |
Fair value of liabilities from Level 1 to Level 2 | 0 | |
Fair value of liabilities from Level 2 to Level 1 | 0 | |
Fair value of assets, Transfers into Level 3 | 0 | |
Fair value of assets, Transfers out of Level 3 | 0 | |
Fair value of liability, Transfers into Level 3 | 0 | |
Fair value of liability, Transfers out of Level 3 | 0 | |
Third party corporate bonds | ||
Fair value of liability, Transfers into Level 3 | $ 107,254,007 | |
Exchange Traded Funds | ||
Equity securities | $ 46,900,000 | |
BBB+ | ||
Interest rate | 5.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Aug. 10, 2020 | |
Earnings Per Share [Abstract] | ||||||
Common stock par value | $ 0.001 | $ 0.001 | $ 0.001 | |||
Common stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | 22,000,000 | ||
Non-voting common shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | |||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | ||
Common stock, shares issued | 3,737,564 | 3,737,564 | 3,737,564 | |||
Common stock, shares outstanding | 3,737,564 | 3,737,564 | 3,737,564 | |||
Weighted average number of shares outstanding, Basic (in shares) | 3,737,564 | 2,540,588 | 3,737,564 | 2,291,629 | ||
Weighted average number of shares outstanding, Diluted (in shares) | 3,737,564 | 2,540,588 | 3,737,564 | 2,291,629 | ||
Weighted average number of anti-diluted shares outstanding | 3,776,169 | 2,542,482 | 3,776,169 | 2,293,523 |
Income Tax Matters (Schedule of
Income Tax Matters (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Loss carryforwards | $ 1,741,665 | $ 1,556,855 |
Capitalized costs | 150,587 | 174,364 |
Stock option granted | 385,879 | 14,270 |
Unrealized losses on investments | 1,020,949 | 1,534,332 |
Policy acquisition costs | 2,637,502 | 2,243,267 |
Charitable contribution carryforward | 2,490 | 2,490 |
Sec 163(j) limitation | 153,809 | 153,809 |
Benefit reserves | 5,769,577 | 3,568,914 |
Total deferred tax assets | 11,862,458 | 9,248,301 |
Less valuation allowance | (9,934,913) | (7,001,687) |
Total deferred tax assets, net of valuation allowance | 1,927,545 | 2,246,614 |
Deferred tax liabilities: | ||
Unrealized losses on investments | 1,665,273 | 1,994,232 |
Due premiums | 81,789 | 81,789 |
Intangible assets | 147,000 | 147,000 |
Bond Discount | 29,327 | 20,556 |
Property and equipment | 4,156 | 3,037 |
Total deferred tax liabilities | $ 1,927,545 | $ 2,246,614 |
Income Tax Matters (Schedule _2
Income Tax Matters (Schedule of Effective Tax Rate Reconciliation) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Computed expected income tax benefit | $ (891,741) | $ (3,372,144) | $ (927,045) | $ 1,238,695 |
Increase (reduction) in income taxes resulting from: | ||||
IMR and reinsurance | 107,961 | 175,006 | ||
Non deductible expenses | 1,549 | 319 | 3,003 | 2,930 |
Change in valuation allowance | 1,531,497 | 4,169,372 | 2,933,227 | 21,682 |
Dividends received deduction | (2,577) | (5,154) | ||
Other | (318,034) | (375,878) | ||
Subtotal of increases | 1,638,430 | 3,851,657 | 3,106,082 | (351,266) |
Tax expense (benefit) | $ 746,689 | $ 479,513 | $ 2,179,037 | $ 887,429 |
Income Tax Matters (Narrative)
Income Tax Matters (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2016 | |
Deferred tax assets, valuation allowance | $ 9,934,913 | $ 9,934,913 | $ 7,001,687 | |||
Income tax expense | 746,689 | $ 479,513 | $ 2,179,037 | $ 887,429 | ||
U.S. federal income tax rate | 21.00% | |||||
Net operating loss ("NOL") carryforwards | 8,293,641 | $ 8,293,641 | $ 1,089,366 | |||
Percentage of carry forward year limited taxable income | 80.00% | |||||
NOLs carryforwards, valuation allowance | $ 1,741,665 | $ 1,741,665 | ||||
Minimum | ||||||
Operating Loss Carryforwards, Expiration Dates | Dec. 31, 2024 | |||||
Maximum | ||||||
Operating Loss Carryforwards, Expiration Dates | Dec. 31, 2040 |
Reinsurance (Summary of Signifi
Reinsurance (Summary of Significant Reinsurance Amounts) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reinsurance Disclosures [Abstract] | ||||||
Reinsurance recoverables | $ 45,237,046 | $ 45,237,046 | $ 32,146,042 | |||
Deposit-type contracts Direct | 848,714,996 | 848,714,996 | 597,868,472 | $ 171,168,785 | ||
Deposit-type contracts Reinsurance ceded | (539,987,972) | (539,987,972) | (405,981,150) | |||
Retained deposit-type contracts | 308,727,024 | 308,727,024 | $ 191,887,322 | |||
Premiums | ||||||
Direct | 53,397 | $ 221,435 | 101,484 | $ 453,108 | ||
Reinsurance ceded | (53,397) | (221,435) | (101,484) | (453,108) | ||
Total Premiums | 30 | 51 | ||||
Future policy and other policy benefits | ||||||
Direct | 14,592 | 18,405 | 21,448 | 52,799 | ||
Reinsurance ceded | $ (14,592) | $ (18,405) | $ (21,448) | $ (52,799) |
Reinsurance (Schedule of Signif
Reinsurance (Schedule of Significant Reinsurance Balances) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Recoverable on Unpaid Losses | $ 148,662 | $ 141,107 |
Recoverable/(Payable) on Benefit Reserves/Deposit-type Contracts | 45,421,693 | 32,310,451 |
Ceded Due Premiums | 333,309 | 305,516 |
Reinsurance recoverables (See Note 9) | $ 45,237,046 | $ 32,146,042 |
Ironbound Reinsurance Company Limited [Member] | ||
AM Best Rating | NR | |
Recoverable/(Payable) on Benefit Reserves/Deposit-type Contracts | $ (1,606,577) | |
Reinsurance payable | $ (1,606,577) | |
Optimum Reinsurance Company [Member] | ||
AM Best Rating | A | A |
Recoverable/(Payable) on Benefit Reserves/Deposit-type Contracts | $ 555,636 | $ 524,734 |
Reinsurance recoverables (See Note 9) | $ 555,636 | $ 524,734 |
Sagicor Life Insurance Company [Member] | ||
AM Best Rating | A- | A- |
Recoverable on Unpaid Losses | $ 148,662 | $ 141,107 |
Recoverable/(Payable) on Benefit Reserves/Deposit-type Contracts | 10,871,729 | 11,285,364 |
Ceded Due Premiums | 290,669 | 276,596 |
Reinsurance recoverables (See Note 9) | $ 10,729,722 | $ 11,149,875 |
SDA Annuity and Life Re | ||
AM Best Rating | NR | NR |
Recoverable/(Payable) on Benefit Reserves/Deposit-type Contracts | $ 4,331,106 | $ 3,540,697 |
Reinsurance recoverables (See Note 9) | $ 4,331,106 | $ 3,540,697 |
Crestline SP 1 | ||
AM Best Rating | NR | NR |
Recoverable/(Payable) on Benefit Reserves/Deposit-type Contracts | $ 17,495,505 | $ 9,695,427 |
Reinsurance recoverables (See Note 9) | $ 17,495,505 | $ 9,695,427 |
American Republic Insurance Company | ||
AM Best Rating | NR | |
Recoverable/(Payable) on Benefit Reserves/Deposit-type Contracts | $ 5,994,880 | |
Reinsurance recoverables (See Note 9) | $ 5,994,880 | |
US Alliance Life and Security Company [Member] | ||
AM Best Rating | NR | NR |
Recoverable/(Payable) on Benefit Reserves/Deposit-type Contracts | $ 7,779,414 | $ 7,264,229 |
Ceded Due Premiums | 42,640 | 28,920 |
Reinsurance recoverables (See Note 9) | $ 7,736,774 | $ 7,235,309 |
Reinsurance (Ceding commissions
Reinsurance (Ceding commissions deferred) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Gross Ceding Commission | $ 4,254,923 | $ 2,855,996 | $ 6,602,236 | $ 3,829,623 | |
Expense Allowances | 8,528,030 | 5,094,952 | 13,265,746 | 6,317,028 | |
Interest On Ceding Commissions | 163,432 | 88,365 | 304,783 | 147,260 | |
Earned Ceding Commission | 572,817 | 114,739 | 1,023,473 | 217,632 | |
Deferred gain on coinsurance transactions | 24,872,873 | 24,872,873 | $ 18,198,757 | ||
Ironbound Reinsurance Company Limited [Member] | |||||
Gross Ceding Commission | 13,465 | 688,110 | |||
Expense Allowances | 14,383 | 5,464 | 28,840 | 679,076 | |
Interest On Ceding Commissions | 53,835 | 64,653 | 108,280 | 110,022 | |
Earned Ceding Commission | 122,807 | 93,086 | 245,023 | 188,826 | |
Deferred gain on coinsurance transactions | 5,572,756 | 5,572,756 | 5,642,095 | ||
SDA Annuity and Life Re | |||||
Gross Ceding Commission | 569,747 | 868,729 | |||
Expense Allowances | 20,724 | 1,080,386 | 45,041 | 1,628,850 | |
Interest On Ceding Commissions | 21,659 | 16,001 | 43,371 | 29,527 | |
Earned Ceding Commission | 44,694 | 11,188 | 90,766 | 18,341 | |
Deferred gain on coinsurance transactions | 2,660,401 | 2,660,401 | 2,703,496 | ||
US Alliance Life and Security Company [Member] | |||||
Gross Ceding Commission | 2,272,784 | 2,178 | 2,272,784 | ||
Expense Allowances | 17,439 | 4,009,102 | 38,174 | 4,009,102 | |
Interest On Ceding Commissions | 15,154 | 7,711 | 30,493 | 7,711 | |
Earned Ceding Commission | 54,055 | $ 10,465 | 120,661 | $ 10,465 | |
Deferred gain on coinsurance transactions | 167,154 | 167,154 | 172,297 | ||
Crestline SP 1 | |||||
Gross Ceding Commission | 2,032,041 | 4,377,176 | |||
Expense Allowances | 4,096,569 | 8,774,776 | |||
Interest On Ceding Commissions | 60,562 | 110,417 | |||
Earned Ceding Commission | 282,598 | 498,360 | |||
Deferred gain on coinsurance transactions | 11,408,621 | 11,408,621 | 6,931,375 | ||
American Republic Insurance Company | |||||
Gross Ceding Commission | 2,222,882 | 2,222,882 | |||
Expense Allowances | 4,378,915 | 4,378,915 | |||
Interest On Ceding Commissions | 12,222 | 12,222 | |||
Earned Ceding Commission | 68,663 | 68,663 | |||
Deferred gain on coinsurance transactions | 2,381,002 | 2,381,002 | |||
US Alliance Life and Security Company(3) | |||||
Deferred gain on coinsurance transactions | 2,425,980 | 2,425,980 | 2,472,559 | ||
Unified Life Insurance Company [Member] | |||||
Deferred gain on coinsurance transactions | $ 256,959 | $ 256,959 | $ 276,935 |
Reinsurance (Retained and Reins
Reinsurance (Retained and Reinsurer Balance Sheets) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Total investments | $ 834,483,301 | $ 518,194,579 |
Cash and cash equivalents | 70,278,979 | 151,679,274 |
Accrued investment income | 10,448,869 | 6,806,836 |
Deferred acquisition costs, net | 21,419,245 | 13,456,303 |
Reinsurance recoverables (See Note 9) | 45,237,046 | 32,146,042 |
Other assets | 5,608,348 | 4,117,725 |
Total assets | 987,475,788 | 726,400,759 |
Liabilities: | ||
Policyholder liabilities | 861,351,553 | 610,808,489 |
Deferred gain on coinsurance transactions | 24,872,873 | 18,198,757 |
Other liabilities | 19,644,927 | 11,064,014 |
Total liabilities | 905,869,353 | 640,071,260 |
Stockholders' Equity: | ||
Voting common stock | 3,738 | 3,738 |
Additional paid-in capital | 135,057,484 | 133,417,272 |
Accumulated deficit | (60,115,614) | (53,522,078) |
Accumulated other comprehensive income | 6,660,827 | 6,430,567 |
Total stockholders' equity | 81,606,435 | 86,329,499 |
Total liabilities and stockholders' equity | 987,475,788 | 726,400,759 |
Retained | ||
Assets | ||
Total investments | 378,874,422 | 185,367,430 |
Cash and cash equivalents | 30,530,673 | 102,334,579 |
Accrued investment income | 3,378,438 | 1,955,938 |
Deferred acquisition costs, net | 21,419,245 | 13,456,303 |
Other assets | 4,143,746 | 2,685,341 |
Total assets | 438,346,524 | 305,799,591 |
Liabilities: | ||
Policyholder liabilities | 308,727,024 | 191,887,322 |
Deferred gain on coinsurance transactions | 24,872,873 | 18,198,757 |
Other liabilities | 23,140,192 | 9,384,013 |
Total liabilities | 356,740,089 | 219,470,092 |
Stockholders' Equity: | ||
Voting common stock | 3,738 | 3,738 |
Additional paid-in capital | 135,057,484 | 133,417,272 |
Accumulated deficit | (60,115,614) | (53,522,078) |
Accumulated other comprehensive income | 6,660,827 | 6,430,567 |
Total stockholders' equity | 81,606,435 | 86,329,499 |
Total liabilities and stockholders' equity | 438,346,524 | 305,799,591 |
Reinsurance | ||
Assets | ||
Total investments | 455,608,879 | 332,827,149 |
Cash and cash equivalents | 39,748,306 | 49,344,695 |
Accrued investment income | 7,070,431 | 4,850,898 |
Reinsurance recoverables (See Note 9) | 45,237,046 | 32,146,042 |
Other assets | 1,464,602 | 1,432,384 |
Total assets | 549,129,264 | 420,601,168 |
Liabilities: | ||
Policyholder liabilities | 552,624,529 | 418,921,167 |
Other liabilities | (3,495,265) | 1,680,001 |
Total liabilities | 549,129,264 | 420,601,168 |
Stockholders' Equity: | ||
Total liabilities and stockholders' equity | $ 549,129,264 | $ 420,601,168 |
Reinsurance (Narrative) (Detail
Reinsurance (Narrative) (Details) | Aug. 25, 2020 | Jul. 23, 2020 | Jul. 01, 2020 | Jun. 30, 2020 | Apr. 01, 2020 | Mar. 10, 2020 | Nov. 07, 2019USD ($) | Jul. 01, 2018USD ($) | Mar. 31, 2020 | Jun. 30, 2019USD ($) | Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Unrealized gains and losses | $ 3,300,000 | $ 2,900,000 | |||||||||||||
Embedded derivative losses | 2,900,000 | ||||||||||||||
Embedded derivative losses | 440,000 | ||||||||||||||
Net premium income | $ 30 | $ 51 | |||||||||||||
Remaining deferred gain | $ 3,069,690 | ||||||||||||||
FW, Modco Agreement | |||||||||||||||
Net premium income | $ 3,970,509 | ||||||||||||||
Net statutory reserves | $ 14,706,862 | 3,986,411 | |||||||||||||
Initial settlement | 13,542,325 | ||||||||||||||
FW, Modco Agreement | MYGA | |||||||||||||||
Percentage of indemnity coinsurance | 0.00% | ||||||||||||||
FW, Modco Agreement | Funds Withheld Account [Member] | |||||||||||||||
Initial settlement | 12,729,785 | 2,256,802 | |||||||||||||
Adjusted reserves cash | 2,391,847 | ||||||||||||||
Amount owed | 135,044 | ||||||||||||||
FW, Modco Agreement | Modco Deposit Account [Member] | |||||||||||||||
Initial settlement | 1,504,535 | ||||||||||||||
Adjusted reserves cash | 1,594,564 | ||||||||||||||
Amount owed | $ 90,029 | ||||||||||||||
FW, Modco SDA Agreement | |||||||||||||||
Number of accounts established to hold assets | item | 2 | 2 | |||||||||||||
FW, Modco SDA Agreement | MYGA | |||||||||||||||
Percentage of indemnity coinsurance | 0.00% | ||||||||||||||
FW, Modco SDA Agreement | FIA | |||||||||||||||
Percentage of indemnity coinsurance | 0.00% | ||||||||||||||
US Alliance Agreement | |||||||||||||||
Initial settlement | 5,000,000 | ||||||||||||||
Seneca Re Agreement | MYGA | |||||||||||||||
Percentage of indemnity coinsurance | 25.00% | ||||||||||||||
Seneca Re Agreement | FIA | |||||||||||||||
Percentage of indemnity coinsurance | 40.00% | ||||||||||||||
SRC1 | |||||||||||||||
Embedded derivative losses | $ 843,000 | 14,800,000 | |||||||||||||
Embedded derivative losses | $ 440,000 | ||||||||||||||
Statutory Revenue | FIA | |||||||||||||||
Percentage of indemnity coinsurance | 0.00% | ||||||||||||||
American Life [Member] | |||||||||||||||
Percentage of indemnity coinsurance | 90.00% | 89.00% | |||||||||||||
American Life amortized amount | 12,348 | $ 211,436 | $ 19,976 | $ 278,886 | |||||||||||
Coinsurance ceding commission deferred | 256,959 | 256,959 | $ 287,331 | ||||||||||||
American Life [Member] | FW, Modco Agreement | |||||||||||||||
Initial settlement | $ 812,539 | ||||||||||||||
Unified Life Insurance Company [Member] | |||||||||||||||
Net cash transferred | $ 14,320,817 | ||||||||||||||
Transferred risk insurance company | 100.00% | ||||||||||||||
Amount transferred for reinsurance | $ 19,311,616 | ||||||||||||||
Net of ceding allowance | $ 3,500,000 | ||||||||||||||
Remaining DAC | 1,890,013 | ||||||||||||||
Value of business acquired | 338,536 | ||||||||||||||
Remaining deferred gain | $ 26,896 | ||||||||||||||
SDA Annuity and Life Re | FW, Modco SDA Agreement | FIA | |||||||||||||||
Percentage of indemnity coinsurance | 5.00% | 30.00% | 95.00% | ||||||||||||
American Life and Security National Life Insurance [Member] | |||||||||||||||
Net premium income | $ 37,500,000 | ||||||||||||||
Net statutory reserves | 34,800,000 | 34,800,000 | |||||||||||||
Amount owed deposit account | $ 2,400,000 | $ 2,400,000 | |||||||||||||
American Life and Security National Life Insurance [Member] | US Alliance Agreement | MYGA | |||||||||||||||
Percentage of indemnity coinsurance | 25.00% | ||||||||||||||
Percentage of multi year guaranteed annuity | 20.00% | ||||||||||||||
American Life and Security National Life Insurance [Member] | US Alliance Agreement | FIA | |||||||||||||||
Percentage of indemnity coinsurance | 40.00% | 45.50% | 66.50% | ||||||||||||
Percentage of fixed indexed annuity | 20.00% | ||||||||||||||
US Alliance Life and Security Company [Member] | US Alliance Agreement | FIA | |||||||||||||||
Percentage of indemnity coinsurance | 49.00% |
Long-Term Incentive Plan (Detai
Long-Term Incentive Plan (Details) | Mar. 11, 2021USD ($)$ / sharesshares | Jan. 16, 2021item$ / sharesshares | Nov. 16, 2020USD ($)$ / sharesshares | Sep. 15, 2020USD ($)$ / sharesshares | Aug. 27, 2020 | Aug. 10, 2020 | Jul. 21, 2020USD ($)$ / sharesshares | May 01, 2020item$ / sharesshares | Jul. 19, 2019USD ($)$ / sharesshares | Jun. 30, 2021USD ($)shares | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)$ / sharesshares | Jun. 30, 2020USD ($)shares | Dec. 31, 2020shares | Jun. 11, 2019shares |
Share based compensation | $ | $ 1,769,567 | $ 25,022 | |||||||||||||
Number of board members resigned | item | 2 | 2 | |||||||||||||
Reverse stock split ratio | 0.002 | 0.002 | |||||||||||||
Stock Options | |||||||||||||||
Granted (in shares) | 6,500 | 35,058 | 6,667 | 26,300 | |||||||||||
Exercise price (per share) | $ / shares | $ 41.25 | ||||||||||||||
Grants, weighted average exercise price (in dollars per share) | $ / shares | $ 55.02 | $ 41.25 | 41.25 | ||||||||||||
Grant date fair value (in dollars per share) | $ / shares | $ 49.38 | $ 29.45 | $ 21.60 | $ 14.50 | |||||||||||
Share based compensation | $ | $ 320,938 | $ 1,032,458 | $ 144,014 | $ 334,950 | |||||||||||
Time to maturity | 10 years | 10 years | 10 years | 10 years | |||||||||||
Risk free interest rate (as a percent) | 1.54% | 0.91% | 0.69% | 0.55% | |||||||||||
Volatility rate (as a percent) | 65.70% | 66.30% | 66.20% | 60.00% | |||||||||||
Vested (in shares) | 200 | 4,650 | 200 | ||||||||||||
Vested fair market value (in dollars per share) | $ / shares | $ 8 | ||||||||||||||
Outstanding non-vested stock (in shares) | 259,124 | 259,124 | 100,972 | ||||||||||||
Forfeited stock (in shares) | 11,700 | 3,350 | |||||||||||||
Schedule of remaining non-vested shares | |||||||||||||||
Non-vested at beginning | 100,972 | 17,900 | 17,900 | ||||||||||||
Forfeited (in shares) | (11,700) | (3,350) | |||||||||||||
Vested (in shares) | (200) | (4,650) | (200) | ||||||||||||
Non-vested at ending | 259,124 | 259,124 | 100,972 | ||||||||||||
Restricted Stock | |||||||||||||||
Granted (in shares) | 18,597 | ||||||||||||||
Grants, weighted average exercise price (in dollars per share) | $ / shares | $ 41.25 | ||||||||||||||
Grant date fair value (in dollars per share) | $ / shares | $ 29.45 | ||||||||||||||
Share based compensation | $ | $ 547,682 | ||||||||||||||
Risk free interest rate (as a percent) | 0.91% | ||||||||||||||
Volatility rate (as a percent) | 66.30% | ||||||||||||||
Vested (in shares) | 4,650 | ||||||||||||||
Vested fair market value (in dollars per share) | $ / shares | $ 29.45 | ||||||||||||||
2020 LTIP | Stock Options | |||||||||||||||
Granted (in shares) | 174,502 | ||||||||||||||
Number of increment on each yearly anniversary of grant | 0.2 | ||||||||||||||
Grants, weighted average exercise price (in dollars per share) | $ / shares | $ 41.25 | ||||||||||||||
Grant date fair value (in dollars per share) | $ / shares | $ 29.45 | ||||||||||||||
Share based compensation | $ | $ 4,900,000 | $ 25,022 | $ 25,022 | $ 25,022 | $ 25,022 | ||||||||||
Time to maturity | 10 years | ||||||||||||||
Risk free interest rate (as a percent) | 0.91% | ||||||||||||||
Volatility rate (as a percent) | 66.30% | ||||||||||||||
Outstanding non-vested stock (in shares) | 100,972 | 100,972 | |||||||||||||
Forfeited stock (in shares) | 3,350 | ||||||||||||||
Schedule of remaining non-vested shares | |||||||||||||||
Forfeited (in shares) | (3,350) | ||||||||||||||
Non-vested at ending | 100,972 | 100,972 | |||||||||||||
2020 LTIP | Co-Chief Executive Officers | Stock Options | |||||||||||||||
Granted (in shares) | 74,751 | ||||||||||||||
2020 LTIP | Other employees | Stock Options | |||||||||||||||
Granted (in shares) | 18,500 | ||||||||||||||
2020 LTIP | Maximum | Stock Options | |||||||||||||||
Shares authorized | 350,000 | ||||||||||||||
2019 LTIP | Stock Options | |||||||||||||||
Granted (in shares) | 17,900 | 68,025 | |||||||||||||
Exercisable period | 10 years | ||||||||||||||
Grants, weighted average exercise price (in dollars per share) | $ / shares | $ 25 | $ 8 | |||||||||||||
Grant date fair value (in dollars per share) | $ / shares | $ 8 | ||||||||||||||
Share based compensation | $ | $ 143,200 | $ 1,500,000 | $ 1,500,000 | $ 1,800,000 | $ 1,800,000 | ||||||||||
Time to maturity | 10 years | ||||||||||||||
Risk free interest rate (as a percent) | 1.84% | ||||||||||||||
Outstanding non-vested stock (in shares) | 259,124 | 259,124 | |||||||||||||
Forfeited stock (in shares) | 11,700 | ||||||||||||||
Schedule of remaining non-vested shares | |||||||||||||||
Forfeited (in shares) | (11,700) | ||||||||||||||
Non-vested at ending | 259,124 | 259,124 | |||||||||||||
2019 LTIP | Restricted Stock | |||||||||||||||
Granted (in shares) | 18,597 | ||||||||||||||
2019 LTIP | Maximum | Stock Options | |||||||||||||||
Shares authorized | 102,000 | ||||||||||||||
Exercisable after July 17, 2021 | 2019 LTIP | |||||||||||||||
Vesting percentage | 33.33% | ||||||||||||||
Exercisable after July 17, 2023 | 2019 LTIP | |||||||||||||||
Vesting percentage | 66.60% |
Deposit-Type Contracts (Details
Deposit-Type Contracts (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Beginning balance | $ 597,868,472 | $ 171,168,785 |
US Alliance | 779,257 | (3,307,587) |
Deposits received | 249,519,268 | 415,561,302 |
Investment earnings (includes embedded derivative) | 1,584,814 | 4,214,828 |
Withdrawals | (6,309,735) | (2,509,045) |
Ending balance | 848,714,996 | 597,868,472 |
Ironbound Reinsurance Company Limited | ||
Deposit contract | 3,110,313 | 6,080,196 |
SDA Annuity and Life Re | ||
Deposit contract | 1,219,703 | 3,053,160 |
Crestline SP 1 | ||
Deposit contract | 703,681 | $ 3,606,833 |
American Republic Insurance Company | ||
Deposit contract | $ 239,223 |
Leases (Schedule of Supplementa
Leases (Schedule of Supplemental Balance Sheet Information Related to Leases) (Details) | Jun. 30, 2021USD ($)leaseitem | Dec. 31, 2020USD ($) |
Leases [Abstract] | ||
Number of finance leases that the company owned at the end of the reporting period | lease | 1 | |
Number of lease agreements that include variable lease payments | item | 0 | |
Noncurrent: | ||
Operating lease right-of-use assets | $ 287,660 | $ 348,198 |
Noncurrent: | ||
Operating lease | $ 331,350 | $ 396,911 |
Leases (Schedule of Components
Leases (Schedule of Components of Leases Expenses) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||||
Operating lease cost (General and administrative expense) | $ 383 | $ 2,485 | $ 1,616 | $ 4,577 |
Finance lease cost: | ||||
Amortization expense | 2,913 | |||
Interest expense | $ 111 |
Leases (Schedule of Finance and
Leases (Schedule of Finance and Operating Leases Mature) (Details) | Jun. 30, 2021USD ($) |
Operating Leases | |
2021 (excluding six months ended June 30, 2021) | $ 81,766 |
2022 | 156,608 |
2023 | 161,674 |
2024 | 13,508 |
Total remaining lease payments | $ 413,556 |
Leases (Schedule of Supplemen_2
Leases (Schedule of Supplemental Cash Flow Information Related to Leases) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Cash payments | ||||
Operating cash flows from operating leases | $ (2,723) | $ (190) | $ (5,023) | $ (1,035) |
Operating cash flows from finance leases | $ 1,164 | 4,657 | ||
Financing cash flows from finance leases | $ (111) |
Leases (Schedule of Weighted Av
Leases (Schedule of Weighted Average Lease Term And Discount Rate) (Details) | Jun. 30, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Weighted Average Remaining Term - Operating lease | 1 year | 1 year 6 months |
Weighted Average Discount Rate - Operating lease | 8.00% | 8.00% |
Statutory Net Income and Surp_2
Statutory Net Income and Surplus (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Statutory net income (loss) | $ 2,278,898 | $ 423,474 | ||||
Capital and surplus | $ 78,509,585 | 78,509,585 | $ 77,446,537 | |||
Net realized gains (losses) on investments | (4,059,926) | $ 12,819,871 | 589,179 | (9,780,139) | ||
Ceded Premiums Written | 53,397 | $ 221,435 | 101,484 | 453,108 | ||
Multi Year Guaranteed Annuity | ||||||
Annuity sales | 35,600,000 | 59,000,000 | ||||
Annuity sales pending | 5,200,000 | 5,200,000 | ||||
Fixed Index Annuity | ||||||
Annuity sales | 214,000,000 | $ 88,500,000 | ||||
Annuity sales pending | $ 26,900,000 | $ 26,900,000 | ||||
Ironbound Reinsurance Company Limited | FW, Modco Agreement | ||||||
Net realized gains (losses) on investments | $ 2,400,000 |
Third Party Administration (Det
Third Party Administration (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
TPA | ||||
Related Party Transaction [Line Items] | ||||
Amount of transaction | $ 107,500 | $ 396,061 | $ 315,000 | $ 786,105 |
Reverse Stock Split (Details)
Reverse Stock Split (Details) | Aug. 27, 2020 | Aug. 10, 2020USD ($)$ / sharesshares | Jun. 30, 2021$ / sharesshares | Dec. 31, 2020$ / sharesshares |
Common Stock, Shares Authorized | 22,000,000 | 20,000,000 | 20,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 | 2,000,000 | |
Preferred stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |
Reverse stock split ratio | 0.002 | 0.002 | ||
Reverse stock split fractions retired | $ | $ 175,000 | |||
Common stock, shares outstanding | 3,737,564 | 3,737,564 | ||
Voting common share | ||||
Common Stock, Shares Authorized | 20,000,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||
Non-voting common shares | ||||
Common Stock, Shares Authorized | 2,000,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 |
Capital Raise (Details)
Capital Raise (Details) - USD ($) | Dec. 21, 2020 | Apr. 24, 2020 | Dec. 31, 2020 |
Capital Raise | |||
Shares issued | 231,655 | ||
Public offering | |||
Capital Raise | |||
Shares issued | 1,000,000 | ||
Price per share | $ 70 | ||
Proceeds from the capital raise | $ 70,000,000 | ||
Deal expenses incurred | $ 6,044,350 |
Equity (Narrative) (Details)
Equity (Narrative) (Details) - shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | Aug. 10, 2020 | |
Preferred stock | |||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 | |
Common Stock | |||
Common stock, shares authorized | 20,000,000 | 20,000,000 | 22,000,000 |
Common stock, shares issued | 3,737,564 | 3,737,564 | |
Common stock, shares outstanding | 3,737,564 | 3,737,564 | |
Non-voting common stock, shares issued | 0 | 0 | |
Non-voting common stock, shares outstanding | 0 | 0 | |
Reverse stock split fractions retired | 4,500 |
Equity (AOCI) (Details)
Equity (AOCI) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Balance | $ 85,632,183 | $ 8,605,382 | $ 86,329,499 | $ 14,158,748 | $ 14,158,748 |
Other comprehensive income (loss) before reclassifications, net of tax | 373,392 | 6,673,662 | 1,336,272 | 2,502,690 | |
Unrealized gains on foreign currency | (976) | (406,255) | |||
Less: Reclassification adjustments for losses realized in net income, net of tax | (784,942) | 12,819,871 | (1,106,012) | (9,780,139) | |
Balance | 81,606,435 | $ 25,952,718 | 81,606,435 | 25,952,718 | 86,329,499 |
Unrealized investment gains (losses) on AFS securities, net of offsets | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Balance | 6,430,567 | 473,399 | 473,399 | ||
Other comprehensive income (loss) before reclassifications, net of tax | 1,336,272 | 7,398,432 | |||
Less: Reclassification adjustments for losses realized in net income, net of tax | (1,106,012) | (1,441,264) | |||
Balance | 6,660,827 | 6,660,827 | 6,430,567 | ||
Unrealized gains on foreign currency | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Balance | 146,185 | 146,185 | |||
Unrealized gains on foreign currency | (146,185) | ||||
Accumulated other comprehensive income (loss) | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Balance | 6,430,567 | $ 619,584 | 619,584 | ||
Other comprehensive income (loss) before reclassifications, net of tax | 1,336,272 | 7,398,432 | |||
Unrealized gains on foreign currency | (146,185) | ||||
Less: Reclassification adjustments for losses realized in net income, net of tax | (1,106,012) | (1,441,264) | |||
Balance | $ 6,660,827 | $ 6,660,827 | $ 6,430,567 |
Deferred Acquisition Costs (Det
Deferred Acquisition Costs (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Deferred Acquisition Costs | ||
Deferred Policy Acquisition Cost, Beginning Balance | $ 13,456,303 | |
Additions | 8,867,230 | $ 13,919,206 |
Amortization | (1,027,073) | (670,233) |
Interest | 187,926 | 138,295 |
Impact of unrealized investment losses | (65,141) | 69,035 |
Deferred Policy Acquisition Cost, Ending Balance | $ 21,419,245 | $ 13,456,303 |